Deutsche Bank is thinking a partial exit from the US market
Reports in local media in Germany indicate that Deutsche Bank is currently mulling over a strategy overhaul as far as the United States is concerned and an exit from the country couldn’t be ruled out.
The bank was been slapped with a massive $14 billion fine by the Department of Justice (DoJ) over the sale of toxic mortgage bonds before the financial crisis and according to reports citing anonymous sources the bank will be actively fighting the fine; however, considering that the bank has already been reworking its strategy in the US chances are that a partial or full exodus may be on the cards, though a full exit could effectively be huge dent in the Bank profits and revenue considering how important US is for the bank’s future.
According to a report in German newspaper Welt am Sonntag, the bank could be working out a settlement with DoJ and a strategy change might be a part of it on top of the fine. One of the change could be that Deutsche Bank could give up its investment banking arm as part of the deal, but nothing has been confirmed yet.
The bank has been engulfed in crisis since news of the DoJ fine demand emerged last month. The Bank is fighting the fine, but if things don’t go in its favor chances are that the Bank will have to turn to its investors for more money if the fine is imposed in full.
On the restructuring front, things are not moving as planned for the bank with no major progress in terms of staff cuts, overheads and the sell off of non-core businesses. Reports also indicate that the bank will most likely double the number of jobs that will be culled thereby taking off another 10,000 employees of its payroll.
Another point that the bank is mulling over, according to a report on Reuters, is to examine all the countries where it is present and to identify those key economies where it will be able to profitably stick around for a long time. The bank is looking for countries where it will be able to generate profits and also mulling over a scenario where it will have to do away with its activities in its investment banking division.
Sueddeutsche Zeitung on Saturday said the supervisory board had been discussing how to proceed in the United States, including a complete withdrawal, although given that market’s importance, this might be too radical a move. A partial exodus from the U.S. could, on the other hand help save capital costs and expenditure, the newspaper said.
Source: Daily Commerce News – Deutsche Bank reportedly mulling partial exit from US market post DoJ fine
