Deutsche Bank's New Plan Is Long on Adjectives, Short on Detail

(Bloomberg) -- Deutsche Bank AG on Thursday announced a restructuring of its investment bank division that may turn out to be its biggest yet. But no one, except its top management, knows for sure.

What Christian Sewing’s debut report as chief executive officer lacked in numbers, it made up for with adjectives. Sewing, at various stages, called the planned cuts “significant,” “material,” and “meaningful,” but at no point explained what that meant.

It’s the bank’s fourth attempt to re-jig its sprawling investment-bank operations in three years, and the task has beaten three of Sewing’s predecessors. Pressed by analysts and reporters in various calls and interviews, Sewing and his chief financial officer, James von Moltke, refused to reveal any numerical targets for the restructuring. The one concession they made was to say that the investment bank’s share of group revenue would be about 50 percent in three year’s time -- it was 53 percent last year -- and raising a previous estimate for this year’s restructuring charge by 300 million euros ($365 million) to 800 million.

The bank wants to “under-promise and over-deliver,” Moltke said in a Bloomberg TV interview. Both he and Sewing promised to update shareholders with more details on the plan as soon as that was possible -- again without saying when that might be.

However, some analysts on the bank’s earnings call weren’t impressed. Autonomous Research’s Stuart Graham dismissed the cuts as just “tinkering”, saying they would only shave non-European costs at the corporate and investment bank by 3 percent.

The bank has a history of holding back on detail. When it announced one year ago that it would merge its two German retail units, it promised 900 million euros of cost savings per year. Almost 14 months later, it’s still to specify how many jobs and branches it will cut to achieve that target.

The lack of specifics on how and where Deutsche Bank wants to shrink its investment bank may create uncertainty among staff and clients, but that was a price the bank is willing to pay for “quick and decisive action,” Moltke said in the Bloomberg interview.

©2018 Bloomberg L.P.

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