Deutsche Bank announces strategic and financial aspirations for 2015 and beyond

Sets course to become the leading client-centric globalrnuniversal bankrnrnStrengthening the business model in a changed environmentrn- Affirms long-standing commitment to universal bankingrnmodelrn- Creates fourth business pillar: an integrated Asset &rnWealth Management division that includes former CB&Srnbusinesses such as ETFsrn- Underlines importance of Germany and sustains regionalrngrowth focus in Asia Pacific and the Americasrn- Positions itself at the forefront of cultural change inrnthe industry, increasing time horizon for deferred bonusrnpayouts for senior management and appointing an independentrnexternal panel to review compensationrn- Reaffirms organic capital growth plan and aims to achievernbest-in-class operational excellencern- Accelerates deleveraging by creating Non-Core OperationsrnunitrnrnSetting financial aspirationsrn- To increase IBIT for PBC to approximately EUR 3 billion,rnto lower cost-income ratio for CB&S to below 65%, and tornmore than double IBIT from 2011 levels for AWM and GTB, allrnby 2015 and taking into account the separation of thernNon-Core Operations unitrn- To achieve fully loaded Basel 3 Core Tier 1 capital ratiornof at least 8% as of March 31, 2013, and more than 10% as ofrnMarch 31, 2015rn- To improve cost-income ratio to less than 65% at a one-offrncost of EUR 4 billion to achieve savings of EUR 4.5 billionrna year by 2015rn- To reach post-tax return on average active equity of 12%rnor more by 2015rnrnDeutsche Bank (XETRA: DBKGn.DE / NYSE: DB) today announcedrnits strategic and financial aspirations for 2015 and beyond,rnsetting the course to become the leading client-centricrnglobal universal bank, said the bank in a statement.rnrnThe plan, “Strategy 2015+”, spells out how the Bank willrnaddress the near-term challenges in the changed businessrnenvironment and positions it to seize the opportunitiesrnpresented by longer-term megatrends.rnJürgen Fitschen and Anshu Jain launched a 100-day review ofrnthe corporate strategy when they became Co-Chairmen of thernManagement Board and the Group Executive Committee on Junern1. Following an intensive period of inclusive dialogue withrnstakeholders, Strategy 2015+ addresses not only the furtherrndevelopment of a sustainable business model, but alsornincludes a commitment to a fundamental change in thernBank’s culture.rnrnJürgen Fitschen and Anshu Jain, Co-Chairmen of DeutschernBank’s Management Board and the Group Executive Committee,rnsaid: “Deutsche Bank aims to emerge as a long-term winnerrnfrom the fundamental shifts taking place in the bankingrnindustry. The medium-term economic and regulatory outlook isrnchallenging, hence we need to significantly improve ourrnoperating performance and efficiency. It is not enough tornadapt our strategy to customers’ changing demands; we alsornhave to secure our competitiveness over the long term andrnfulfill our responsibility to society.”rnrnStrategy 2015+rnrnStrengthening the business modelrnWith Strategy 2015+, Deutsche Bank reaffirms its commitmentrnto the universal banking model, its home market of Germanyrnand its global footprint; addresses the need for furtherrndeleveraging, organic capital growth and operationalrnexcellence; and positions itself at the forefront ofrncultural change in the banking industry.rnrnThe Bank believes that its four business pillars are ideallyrnplaced to balance its earnings mix and to satisfyrnincreasingly complex and global customer needs. Strategyrn2015+ defines a framework to develop the Private & BusinessrnClients, Corporate Banking & Securities and GlobalrnTransaction Banking divisions, bolstered by a new fullyrnintegrated Asset & Wealth Management division. Closerrncollaboration between the individual business divisions andrnthe infrastructure functions should generate substantialrnsynergies.rnrnThe Private & Business Clients (PBC) division, the leader inrnGerman retail banking, will aim to strengthen its position.rnThe division will leverage its sizable deposit base and willrnlend more to its retail and business clients. Thernintegration of Postbank, already well underway, is expectedrnto yield significant additional synergies in the comingrnyears. PBC aims to increase income before income taxesrn(IBIT) for its operating business from EUR 2 billion in 2011rnto approximately EUR 3 billion by 2015.rnrnThe goal of the Corporate Banking & Securities (CB&S)rndivision is to retain its leading position whilernrecalibrating its model. The division, which has won marketrnshare through the financial crisis, will work to cement itsrnleading position in Europe and to increase its share in thernUS and Asia Pacific. To secure a sustainable post-tax returnrnon equity of approximately 15% for its operating business,rnCB&S aims to lower its cost-income ratio to below 65%,rncutting costs by EUR 1.9 billion by 2015.rnrnThe newly integrated Asset & Wealth Management (AWM)rndivision is an essential part of the universal bankingrnmodel. Combining active and passive investment strategiesrntogether with retail asset management in one business unitrnwill position the Bank to fully exploit the potential of itsrnroughly EUR 900 billion in assets under management andrninvested assets and to generate added value for customers.rnFollowing an extensive review, DWS Americas, DB Advisors,rnDeutsche Insurance Asset Management and RREEF will bernintegral parts of AWM. The new division will also includernformer CB&S passive and third-party alternatives businessesrnsuch as exchange traded funds (ETFs). It will build anrnefficient platform for future growth by eliminating as muchrnduplication as possible. As a result, AWM aspires to doublernIBIT for its operating business from around EUR 0.8 billionrnin 2011 to approximately EUR 1.7 billion in 2015, whilernfirmly establishing itself as a global leader by increasingrnassets under management and invested assets to about EUR 1rntrillion.rnrnThe growth strategy of Global Transaction Banking (GTB) willrncontinue, investing to build further market share in allrncustomer segments, product areas and regional markets aroundrnthe world. GTB has delivered strong and consistentrnperformance across the cycle based on a solutions-oriented,rnscale business model. Its aspiration is to double IBIT fromrnEUR 1 billion in 2011 to approximately EUR 2.4 billion byrn2015.rnrnIn line with its goal to become the leading client-centricrnglobal universal bank, Deutsche Bank will continue to expandrnits geographic footprint throughout the regions. Onernstrategic priority is Asia Pacific, which offers therngreatest growth potential in coming years. Another is thernAmericas, where Deutsche Bank will continue to invest,rnaiming to benefit from the anticipated recovery of the USrneconomy and to capture additional market share in the widerrnregion. At the same time, the Bank will make the most of itsrnposition at the heart of Europe’s largest economy,rnGermany. It will leverage this competitive advantage withrnplans to increase commercial and retail lending by at leastrnEUR 10 billion by 2015.rnrnThe aspirations the Bank has set for Strategy 2015+ arernbased on a number of key assumptions, includingrnnormalization/stabilization of asset valuations, revenuerngrowth by the Bank in line with the market, no major changesrnto current regulatory frameworks on capital or separation ofrnbusiness activities, global GDP growth in the range of 2% torn4% per annum over the period, normalization of the EUR/USDrnexchange rate at approximately 1.30 and the Bank’srnachievement of selective consolidation-driven market sharerngains.rnrnLeading cultural changernrnThe Bank recognizes that change to its corporate culture isrnimperative. Following a period of reflection and dialoguernwith stakeholders, it has set itself the aim of being at thernforefront of cultural change in the banking sector.rnrnCompensation practices are one important way to achievernbehavioral change and align incentives to longer-termrnsustainable performance on behalf of all stakeholders. ThernBank is committed to reducing bonus payments in relation tornbusiness performance and will increase the time horizon forrndeferred bonus payouts to top management, with a singlernpayment after five years rather than staggered payments overrnthree.rnrnIn addition, Deutsche Bank will be a pioneer in appointingrnan independent external panel to review the structure andrngovernance of compensation. The panel will consist ofrnindustry leaders, academics and compensation experts, andrnits recommendations will immediately influence annualrncompensation for 2012.rnrnAchieving operational excellence and setting financialrnaspirationsrnrnDeutsche Bank has always reported capital ratios comfortablyrnabove regulatory thresholds and is committed to doing so inrnthe future. The Bank has identified a series of measures tornpromote organic capital growth and further reducernrisk-weighted assets, underpinned as ever by prudent riskrnmanagement.rnrnThe Bank will exploit organic options such as retainedrnearnings and bonus retention to reinforce its capital base.rnUnder full application of Basel 3, the Bank expects tornachieve a Core Tier 1 ratio of 7.2% at the beginning ofrn2013. This is planned to rise to at least 8% by the end ofrnthe first quarter of 2013 and more than 10% by the end ofrnthe first quarter of 2015.rnrnThe Bank is accelerating the process of sheddingrnrisk-weighted assets from non-core activities by creating arndedicated Non-Core Operations unit with risk-weightedrnassetsequivalent of approximately EUR 135 billion as of Junern2012. This unit will primarily hold securities from CB&S andrnother business divisions, plus operating assets fromrnCorporate Investments. As a distinct division, the unit willrnbe transparent, fully accountable, and empowered to managernand sell assets in the most efficient manner for the Bank,rnstarting with an initial aim to reduce holdings by EUR 45rnbillion, or 33%, by March 2013.rnrnThe Bank aims to secure its long-term competitiveness byrnachieving operational excellence with major reductions inrncosts, duplication and complexity in the years ahead. Itrnplans to incur one-off costs of approximately EUR 4 billionrnover the next three years with the aim of achieving annualrnsavings of EUR 4.5 billion by 2015. Nearly 40%, or EUR 1.7rnbillion, of the planned savings relate to the Bank’srninfrastructure, including investing in new integrated ITrnplatforms, rationalizing regional back-office activities andrncentralizing procurement. The Bank further plans tornconsolidate its real-estate footprint by putting around 40rnproperties up for sale. As a result, the Bank aims tornimprove the cost-income ratio to less than 65% by 2015.rnrnIn view of the changed market environment and stricterrncapital requirements under Basel 3, the Bank aspires to arnpost-tax return on equity of at least 12% by 2015. This isrncalculated using a notional effective tax rate for the Grouprnof between 30% and 35%.