LONDON/FRANKFURT • Deutsche Bank is considering scaling back its Italian retail operations by selling branches and cutting jobs as its new chief executive overhauls the company to keep pace with rivals, according to five sources familiar with the matter.
CEO John Cryan is under pressure to reform Germany's flagship bank to reduce costs and boost profitability, after costly litigation from a series of scandals and the fallout from the Asian market rout pushed its valuation well below those of competitors such as Credit Suisse and UBS.
Italy is Deutsche Bank's second-biggest European retail business after Germany, with 4,000 staff and around 300 branches. The review could lead to a large reduction of its operations and pave the way for a possible exit from the country further down the line, three of the sources said.
The overhaul at Deutsche Bank is part of a wide- ranging restructuring at European investment banks. Thousands of job-cuts, business closures and billions of euros of capital raisings are on the cards as bosses respond to pressure to devise new strategies to revive them.
"No final decision has been taken on what to sell - and how to sell it - in Italy. But Deutsche Bank's presence in the country is no longer seen as strategic," said one source.
Deutsche Bank declined to comment. The bank announced a record pre-tax loss of €6 billion (S$9.2 billion) in the third quarter and warned of a possible dividend cut.
Mr Cryan, who became CEO in July with a promise to reduce costs, is due to reveal details of its new strategy tomorrow.
Last year, Deutsche Bank took steps to shrink its Italian network and sold 90 branches as part of a sale-and-leaseback deal with a property investor.
But a further reduction of its operations would represent a significant step in a country where it has been present since the 1920s and which it has said is profitable "despite a difficult market environment".
It would not be alone in retreating, however. Other international banks including Barclays and GE Capital have put their Italian units on the block as they shift their focus away from certain European markets.
The overhaul at Deutsche Bank is part of a wide-ranging restructuring at European investment banks.
Thousands of job-cuts, business closures and billions of euros of capital raisings are on the cards as bosses respond to pressure to devise new strategies to revive them.
Details of the Deutsche Bank restructuring already announced this month include splitting its investment bank in two and parting ways with some of its top bankers.
It will also split up its wealth management division into one business looking after its super-rich clients and another focusing on institutional clients and funds.