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Deutsche Bank (DB) Streamlines Units, Aims Cost Savings

Zacks Equity Research

Per a Bloomberg report, Frankfurt-based German lender – Deutsche Bank AG DB – plans restructuring of its Corporate & Investment Banking (CIB) business segment, along with formation of a new unit – Global Capital Markets. As per the reorganization plan, which will become effective Jul 1, 2017, Marcus Schenck and Garth Ritchie will head the reshuffled CIB unit, while Alexander von zur Muehlen in Frankfurt and Mark Fedorcik in New York will jointly handle the new division.

Precisely, Schenck would look after corporate finance, global capital markets, and the bank's institutional client group’s clients. Moreover, products and processes, equities, fixed income and currencies, global transaction banking, electronic trading, listed derivatives and clearing, research and the unit's technology and operations will be supervised by Ritchie.

Per the memo, the executive committee of the CIB unit had requested a special team "to reduce bureaucracy and complexity, which will achieve substantial cost savings in 2017."

The new division will be affiliated with Deutsche Bank’s corporate finance and institutional client group and will "operate financially as a joint venture" among its corporate finance, equities and fixed income and currencies units, according to the email.

We believe that gradual achievements in the strategy will support bottom-line expansion.

Conclusion

CEO – John Cryan – is expediting efforts to revamp the bank. Cryan has pressed for the need of simplifying the bank’s business model, reducing costs and pulling back unprofitable businesses. We believe that the gradual execution of the restructuring moves should support the company’s prospects. As the European economy is yet to stabilize, however, we don’t foresee any significant favorable change in the company's performance in the near term.

At present, Deutsche Bank carries a Zacks Rank #3 (Hold).

Deutsche Bank’s shares gained around 7.5% over the past one year, as against 23.5% gain of the Zacks categorized Foreign Banks industry.



Stocks to Consider

Grupo Financiero Galicia S.A. GGAL has been witnessing upward estimate revisions for the last 30 days. Also, the company’s shares have risen nearly 76.9% over the past six months. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

UBS Group AG UBS has been witnessing upward estimate revisions for the last 60 days. Further, the stock gained over 8% over the past one year. It currently flaunts a Zacks Rank #1.

Banco Bilbao Viscaya Argentaria S.A. BBVA has been witnessing upward estimate revisions for the last 60 days. Also, the company’s shares have risen nearly 33% over the past one year. It currently carries a Zacks Rank #2 (Buy).

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