(Bloomberg) -- Deutsche Bank AG has had an issue with its business model but it is now getting a handle on its problems, according to Europe’s top regulator.
Andrea Enria, head of the European Central Bank’s supervisory arm, said at a conference in Rome Monday that Deutsche Bank “had clearly an issue with the viability of the business model” and the ECB has been “pushing” the lender’s restructuring efforts.
The central bank views the business plan recently unveiled by Chief Executive Officer Christian Sewing “positively” and Deutsche Bank is “well along in executing” it, Enria added in an emailed statement Tuesday clarifying his remarks the previous day.
“The bank has also made good progress in enhancing controls and reducing their risk profile,” Enria added. “The recent reduction in capital requirements reflects this significant progress.”
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Enria’s remarks in Rome marked a departure from the standard practice of declining to comment on specific banks, which he himself acknowledged.
“Of course it’s very difficult for me as a supervisor to speak in public about an individual bank and I usually decline these type of questions,” he said.
“But what I would say simply is that Deutsche Bank is one of those banks that had clearly an issue with the viability of the business model and the perception of the market on the long-term viability of the business model,” he added.
Important Change
“The low market valuation has reflected that judgment. The bank has now engaged in an important change in their business model and we have been pushing and accompanying this change.”
CEO Sewing is currently working on the bank’s biggest restructuring in two decades. He aims to cut about a fifth of the workforce and some $6.5 billion in costs by the end of 2022, but he’s already had to tweak his plan several times and scale back a key revenue target.
The ECB last week lowered the amount of capital it requires Deutsche Bank to hold to absorb potential losses. The bank has said it’s ahead of schedule in cutting assets it has placed in a wind-down unit.
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