How CEO Christian Sewing is Mending Deutsche Bank
Christian Sewing, CEO of Deutsche Bank since 2018, is steering the German lender through a significant transformation.
Sewing's approach to saving Deutsche Bank involves balancing cost-cutting with strategic investments. He is attempting to position the bank as a leaner, more focused institution that can compete effectively in its core markets.
Sewing's plan, unveiled in 2019, involves a radical reshaping of Deutsche Bank's operations. He has overseen its exit from global equities trading and reduced the investment banking division's footprint. This move aims to refocus the bank on its core strengths in corporate banking and wealth management.
Cost-cutting has been a key pillar of Sewing's approach.
This week, Deutsche Bank let go of 111 senior managers in its retail and private wealth unit as the division implements deep cost cuts to meet stretching 2025 targets.
Deutsche Bank’s private bank, which includes its mass-market retail unit in Germany and the wealth management arm, generates 31% of the lender’s revenue but only 23% of its profit.
The 111 bankers culled represented 8% of the directors and managing directors in the retail and private wealth unit.
For years, it has been marked out as an underperforming division that failed to earn its cost of capital and annoyed clients and regulators with a botched IT migration.
Turning around the unit has been one of the cornerstones of Sewing’s strategy.
Sewing was a veteran of the division, serving as its co-head until 2018.
Investment in digitalisation
Sewing is also emphasising the importance of technology and digitalisation. Deutsche Bank has increased its investment in IT infrastructure and digital platforms to enhance customer experience and operational efficiency. This includes partnerships with fintech companies and the development of in-house digital solutions.
Risk management has been another priority under Sewing's leadership. The bank has strengthened its compliance and control functions to address regulatory concerns and improve its reputation. This includes enhancing anti-money laundering systems and improving overall risk governance.
Sewing has set ambitious financial targets for Deutsche Bank, designed to demonstrate the bank's progress to investors and regulators.
Deutsche Bank is targeting revenues of approximately €30bn (£25bn) by 2025, with a compound annual growth rate of 3.5-4.5% by the end of next year.
Restoring trust
The CEO is also focusing on rebuilding Deutsche Bank's culture. He has emphasised the importance of ethical behaviour and customer-centricity. This cultural shift is intended to restore trust in the bank and improve its standing in the financial industry.
Sustainability has become a key component of Sewing's strategy. Deutsche Bank has set an ambitious target of achieving €500bn (£414bn) in sustainable financing and investment volumes between 2020 and 2025. As of the end of 2023, the bank had reached €279bn (£231bn) towards this goal, aligning with growing client demand for ESG-related products and services.
Sewing's efforts have shown some positive results.
Deutsche Bank made a post-tax profit of €1.5bn (£1.2bn) in the first half of 2024.
More importantly for Sewing, who wants to get the bank’s cost-to-income ratio to below 62.5% by the end of 2025, the bank’s cost/income ratio was 69% in the first half of 2024.
However, challenges remain. Deutsche Bank continues to face regulatory scrutiny and competitive pressures in key markets. The low interest rate environment in Europe also poses ongoing challenges for the bank's profitability.
The success of Sewing's strategy will depend on Deutsche Bank's ability to execute its transformation plan while navigating an uncertain economic environment. The coming years will be crucial in determining whether his efforts can secure the bank's long-term future.
"What I wanted to achieve with the transformation was to re-establish a global bank but with a balanced business in the private bank, in the corporate bank, with asset management and a focused but successful investment bank," Sewing told Euromoney.
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