Berlin: Deutsche Bank AG, which runs Europe’s biggest investment bank by revenue, said it expects revenue to be little changed this year as an improved environment for banks helps offset the impact of disposals.
“The outlook reflects the expected modest economic recovery in Europe, while growth in the Americas is expected to benefit from fiscal stimulus, as well as the positive impact of an improving interest rate environment,” the bank said in its annual report published Monday. “We expect a meaningful client activity pickup in 2017, of which we have already seen evidence in the beginning of this year.”
The bank said it plans to return to a “normal compensation” program this year after slashing its bonus pool to €0.5 billion ($0.5 billion) last year, the lowest since at least 2009. Overall compensation fell to €8.9 billion from €10.5 billion a year earlier.
Chief Executive Officer John Cryan, 56, is seeking to boost revenue after spending almost two years navigating legal probes and cutting back risk in the investment bank. In a strategic about-face announced this month, Cryan said he would tap shareholders for new cash to rebuild capital buffers and abandon a planned sale of a German consumer-banking unit to help the bank to return to a “modest growth mode.”
Deutsche Bank is raising €8 billion by issuing new shares at 11.65 euros apiece, the bank said Sunday, a discount of about 35 per cent from Friday’s close. The bank said previously that the move would boost its common equity Tier 1 ratio, a key benchmark of financial strength, to 14.1 per cent from 11.9 per cent at the end of 2016. It vowed to keep it “comfortably above” 13 per cent.
Deutsche Bank fell 1.5 per cent to €17.59 at 9:13am in Frankfurt. The had stock had rallied 69 per cent from a record low on Sept. 26 through Friday, the second-best performer in the Bloomberg Europe 500 Banks and Financial Services Index.
The bank now plans to reintegrate the Deutsche Postbank AG unit it had planned to sell as well as combine its trading and corporate and investment banking divisions. Deutsche Bank wants to free up another €2 billion of capital by selling assets including shares in its asset management business.
Deutsche Bank said earlier this month that the new phase of its overhaul will cause the loss of additional jobs, without specifying how many. That comes after an announcement in 2015 that it would eliminate about 9,000 jobs by the end of 2018 to cut costs.
The bank said in its report that the US. Department of Justice has closed a criminal inquiry into possible violations of federal law in connection with the foreign exchange markets.