FRANKFURT • One year after he split Deutsche Bank's investment banking and trading units, Mr John Cryan has put them back together with a familiar mandate: fewer clients and lower costs.
Mr Cryan, chief executive officer since 2015, said on Sunday that the business will focus more on corporate clients and will pare the list of fund managers and other institutions it serves.
Division heads will now be tasked with striking a balance between stemming a loss of market share to rivals that accelerated last year and cutting €700 million (S$1.05 billion) of costs by next year.
That comes as the firm pivots away from hedge funds and other financial firms, pledging almost two-thirds of the unit's balance sheet for corporations.
In 2011, institutional clients accounted for about twice as much revenue as corporate customers.
"What John is saying is, rather than be a bank (that) runs around after other banks and financial institutions, we're in the biggest corporate market in Europe and we want to be a part of that," said Mr Christopher Wheeler, an analyst in London with Atlantic Equities. "That does lead to steadier business."
What John is saying is rather than be a bank (that) runs around after other banks and financial institutions, we're in the biggest corporate market in Europe and we want to be a part of that. That does lead to steadier business.
MR CHRISTOPHER WHEELER, an analyst in London with Atlantic Equities.
Mr Cryan said that the bank will invest in client-facing jobs, while eliminating back-office positions in the division.
Investors and analysts had raised concerns last month that efforts to cut costs and boost capital had contributed to the trading unit's flagging performance.
Revenue missed analysts' estimates and the bank's market share among its biggest rivals in both debt and equity trading dropped to the lowest since the financial crisis.
How to turn a profit from the markets business has proved a quandary for Mr Cryan.
Separating the business from the advisory and underwriting units and shrinking it was part of his initial overhaul announced in October 2015. It went into effect in the first quarter of last year. A number of his predecessor Anshu Jain's top deputies departed as part of the shake-up.
The latest move is aimed at getting more companies to be clients of all three of the investment banking, trading and transaction banking units. The firm said that it would allocate 65 per cent of the division's risk-weighted assets to corporate clients, up from the current 55 per cent.
The move marks a reversal from its efforts to cater to hedge funds by growing its prime brokerage unit.
The bank also identified about €20 billion of risk-weighted assets from the division that it will manage separately and run down over time.
Mr Cryan acknowledged that some bankers may question the quick reversal of a strategy announced less than two years ago.
"...you'll see on closer inspection, that we have not simply revived old concepts," Mr Cryan wrote in a letter to an employee.
"Without placing any self-imposed limits on our thinking, we selected the right structure for us to react quickly and firmly to the needs of our clients, given a dynamic market environment and new regulatory requirements."