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14 January 2015

Financial Times: Deutsche considers retail bank spin-off

The politically sensitive move could be announced by Anshu Jain and Jürgen Fitschen, its co-chief executives, as part of a new strategic plan they are preparing to present in the second quarter.

One option, according to a person familiar with the situation, is to sell a stake in Postbank, the German post office bank that Deutsche bought in 2008. Another is to spin off its entire retail banking unit. But no decision has been taken, the person said.

Such a move would be an admission from the duo that they can no longer achieve their previously stated ambition of remaining Europe’s last global, universal bank after retreats by rivals, such as Barclays and Royal Bank of Scotland.

Deutsche said: “The bank will review and update its strategy over the course of the coming year. It is irresponsible to speculate on the sale of any business.” 

A spin-off of Deutsche’s retail business, which has 2,700 branches mostly in Germany, would also underline how big European banks are being forced to consider dismantling themselves to comply with new structural reforms.

Germany is considering moves to bring its law on structural reform of banks more closely into line with European Union proposals to force lenders to separate their trading activities from their other operations.

Deutsche has been prevented by BaFin, its domestic regulator, from using the deposits of its retail customers to finance operations in its corporate and investment bank, the person said. BaFin declined to comment.

The bank also faces pressure from regulators to boost its leverage ratio, a gauge of indebtedness that measures equity against total assets, which rose to 3.2 per cent after an €8bn share sale last year, but still lags behind many of its main rivals. 

Selling the retail bank would boost its leverage ratio by removing a big mortgage portfolio from Deutsche’s balance sheet.

Jain and Fitschen face growing pressure from investors to take radical action to reverse several years of disappointing performance.

Full article on Financial Times (subscription required)

© Financial Times

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