Deutsche Bank announces strategic and financial aspirations
for 2015 and beyond |
Autor: Bancherul.ro
2012-09-11 16:30 |
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Sets course to become the leading client-centric global
universal bank
Strengthening the business model in a changed environment
- Affirms long-standing commitment to universal banking
model
- Creates fourth business pillar: an integrated Asset &
Wealth Management division that includes former CB&S
businesses such as ETFs
- Underlines importance of Germany and sustains regional
growth focus in Asia Pacific and the Americas
- Positions itself at the forefront of cultural change in
the industry, increasing time horizon for deferred bonus
payouts for senior management and appointing an independent
external panel to review compensation
- Reaffirms organic capital growth plan and aims to achieve
best-in-class operational excellence
- Accelerates deleveraging by creating Non-Core Operations
unit
Setting financial aspirations
- To increase IBIT for PBC to approximately EUR 3 billion,
to lower cost-income ratio for CB&S to below 65%, and to
more than double IBIT from 2011 levels for AWM and GTB, all
by 2015 and taking into account the separation of the
Non-Core Operations unit
- To achieve fully loaded Basel 3 Core Tier 1 capital ratio
of at least 8% as of March 31, 2013, and more than 10% as of
March 31, 2015
- To improve cost-income ratio to less than 65% at a one-off
cost of EUR 4 billion to achieve savings of EUR 4.5 billion
a year by 2015
- To reach post-tax return on average active equity of 12%
or more by 2015
Deutsche Bank (XETRA: DBKGn.DE / NYSE: DB) today announced
its strategic and financial aspirations for 2015 and beyond,
setting the course to become the leading client-centric
global universal bank, said the bank in a statement.
The plan, "Strategy 2015+", spells out how the Bank will
address the near-term challenges in the changed business
environment and positions it to seize the opportunities
presented by longer-term megatrends.
Jürgen Fitschen and Anshu Jain launched a 100-day review of
the corporate strategy when they became Co-Chairmen of the
Management Board and the Group Executive Committee on June
1. Following an intensive period of inclusive dialogue with
stakeholders, Strategy 2015+ addresses not only the further
development of a sustainable business model, but also
includes a commitment to a fundamental change in the
Bank's culture.
Jürgen Fitschen and Anshu Jain, Co-Chairmen of Deutsche
Bank's Management Board and the Group Executive Committee,
said: "Deutsche Bank aims to emerge as a long-term winner
from the fundamental shifts taking place in the banking
industry. The medium-term economic and regulatory outlook is
challenging, hence we need to significantly improve our
operating performance and efficiency. It is not enough to
adapt our strategy to customers' changing demands; we also
have to secure our competitiveness over the long term and
fulfill our responsibility to society."
Strategy 2015+
Strengthening the business model
With Strategy 2015+, Deutsche Bank reaffirms its commitment
to the universal banking model, its home market of Germany
and its global footprint; addresses the need for further
deleveraging, organic capital growth and operational
excellence; and positions itself at the forefront of
cultural change in the banking industry.
The Bank believes that its four business pillars are ideally
placed to balance its earnings mix and to satisfy
increasingly complex and global customer needs. Strategy
2015+ defines a framework to develop the Private & Business
Clients, Corporate Banking & Securities and Global
Transaction Banking divisions, bolstered by a new fully
integrated Asset & Wealth Management division. Closer
collaboration between the individual business divisions and
the infrastructure functions should generate substantial
synergies.
The Private & Business Clients (PBC) division, the leader in
German retail banking, will aim to strengthen its position.
The division will leverage its sizable deposit base and will
lend more to its retail and business clients. The
integration of Postbank, already well underway, is expected
to yield significant additional synergies in the coming
years. PBC aims to increase income before income taxes
(IBIT) for its operating business from EUR 2 billion in 2011
to approximately EUR 3 billion by 2015.
The goal of the Corporate Banking & Securities (CB&S)
division is to retain its leading position while
recalibrating its model. The division, which has won market
share through the financial crisis, will work to cement its
leading position in Europe and to increase its share in the
US and Asia Pacific. To secure a sustainable post-tax return
on equity of approximately 15% for its operating business,
CB&S aims to lower its cost-income ratio to below 65%,
cutting costs by EUR 1.9 billion by 2015.
The newly integrated Asset & Wealth Management (AWM)
division is an essential part of the universal banking
model. Combining active and passive investment strategies
together with retail asset management in one business unit
will position the Bank to fully exploit the potential of its
roughly EUR 900 billion in assets under management and
invested assets and to generate added value for customers.
Following an extensive review, DWS Americas, DB Advisors,
Deutsche Insurance Asset Management and RREEF will be
integral parts of AWM. The new division will also include
former CB&S passive and third-party alternatives businesses
such as exchange traded funds (ETFs). It will build an
efficient platform for future growth by eliminating as much
duplication as possible. As a result, AWM aspires to double
IBIT for its operating business from around EUR 0.8 billion
in 2011 to approximately EUR 1.7 billion in 2015, while
firmly establishing itself as a global leader by increasing
assets under management and invested assets to about EUR 1
trillion.
The growth strategy of Global Transaction Banking (GTB) will
continue, investing to build further market share in all
customer segments, product areas and regional markets around
the world. GTB has delivered strong and consistent
performance across the cycle based on a solutions-oriented,
scale business model. Its aspiration is to double IBIT from
EUR 1 billion in 2011 to approximately EUR 2.4 billion by
2015.
In line with its goal to become the leading client-centric
global universal bank, Deutsche Bank will continue to expand
its geographic footprint throughout the regions. One
strategic priority is Asia Pacific, which offers the
greatest growth potential in coming years. Another is the
Americas, where Deutsche Bank will continue to invest,
aiming to benefit from the anticipated recovery of the US
economy and to capture additional market share in the wider
region. At the same time, the Bank will make the most of its
position at the heart of Europe's largest economy,
Germany. It will leverage this competitive advantage with
plans to increase commercial and retail lending by at least
EUR 10 billion by 2015.
The aspirations the Bank has set for Strategy 2015+ are
based on a number of key assumptions, including
normalization/stabilization of asset valuations, revenue
growth by the Bank in line with the market, no major changes
to current regulatory frameworks on capital or separation of
business activities, global GDP growth in the range of 2% to
4% per annum over the period, normalization of the EUR/USD
exchange rate at approximately 1.30 and the Bank's
achievement of selective consolidation-driven market share
gains.
Leading cultural change
The Bank recognizes that change to its corporate culture is
imperative. Following a period of reflection and dialogue
with stakeholders, it has set itself the aim of being at the
forefront of cultural change in the banking sector.
Compensation practices are one important way to achieve
behavioral change and align incentives to longer-term
sustainable performance on behalf of all stakeholders. The
Bank is committed to reducing bonus payments in relation to
business performance and will increase the time horizon for
deferred bonus payouts to top management, with a single
payment after five years rather than staggered payments over
three.
In addition, Deutsche Bank will be a pioneer in appointing
an independent external panel to review the structure and
governance of compensation. The panel will consist of
industry leaders, academics and compensation experts, and
its recommendations will immediately influence annual
compensation for 2012.
Achieving operational excellence and setting financial
aspirations
Deutsche Bank has always reported capital ratios comfortably
above regulatory thresholds and is committed to doing so in
the future. The Bank has identified a series of measures to
promote organic capital growth and further reduce
risk-weighted assets, underpinned as ever by prudent risk
management.
The Bank will exploit organic options such as retained
earnings and bonus retention to reinforce its capital base.
Under full application of Basel 3, the Bank expects to
achieve a Core Tier 1 ratio of 7.2% at the beginning of
2013. This is planned to rise to at least 8% by the end of
the first quarter of 2013 and more than 10% by the end of
the first quarter of 2015.
The Bank is accelerating the process of shedding
risk-weighted assets from non-core activities by creating a
dedicated Non-Core Operations unit with risk-weighted
assetsequivalent of approximately EUR 135 billion as of June
2012. This unit will primarily hold securities from CB&S and
other business divisions, plus operating assets from
Corporate Investments. As a distinct division, the unit will
be transparent, fully accountable, and empowered to manage
and sell assets in the most efficient manner for the Bank,
starting with an initial aim to reduce holdings by EUR 45
billion, or 33%, by March 2013.
The Bank aims to secure its long-term competitiveness by
achieving operational excellence with major reductions in
costs, duplication and complexity in the years ahead. It
plans to incur one-off costs of approximately EUR 4 billion
over the next three years with the aim of achieving annual
savings of EUR 4.5 billion by 2015. Nearly 40%, or EUR 1.7
billion, of the planned savings relate to the Bank's
infrastructure, including investing in new integrated IT
platforms, rationalizing regional back-office activities and
centralizing procurement. The Bank further plans to
consolidate its real-estate footprint by putting around 40
properties up for sale. As a result, the Bank aims to
improve the cost-income ratio to less than 65% by 2015.
In view of the changed market environment and stricter
capital requirements under Basel 3, the Bank aspires to a
post-tax return on equity of at least 12% by 2015. This is
calculated using a notional effective tax rate for the Group
of between 30% and 35%.
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