U.S. Department of Justice wants Deutsche Bank to pay $14 billion to settle an investigation of its sales of mortgage-backed securities.
NEW YORK: Deutsche Bank AG is creating a new combined debt, equity and leveraged capital markets business within the investment bank as it focuses on corporate clients, according to a copy of an memo seen by Bloomberg.
The bank also detailed the division of responsibilities between Marcus Schenck and Garth Ritchie, co-heads of the newly-combined investment banking and trading units. Schenck will focus on clients and oversee corporate finance, global capital markets and the institutional client group, while Ritchie will deal with products and processes and oversee operations including equities, fixed income and currencies, the email said.
The two executives are tasked with striking a balance between stemming a loss of market share that accelerated last year and cutting 700 million euros (US$742mil) of costs by 2018. 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.
Troy Gravitt, a spokesman for the firm, declined to comment.
The newly-created Global Capital Markets division will be headed by Alexander von zur Muehlen and Mark Fedorcik, reporting from Frankfurt and New York, respectively, the email said.
The new division will work in partnership with the bank’s corporate finance and institutional client group and will “operate financially as a joint venture” between its corporate finance, equities and fixed income and currencies units, according to the email.
Fedorcik and von zur Muehlen will report to Schenck and Ritchie, who were co-authors of the email.
Cryan has said previous management teams made the bank too complex and inefficient by putting short-term earnings ahead of Deutsche Bank’s long-term interests. He is now implementing long-term plans to overhaul the lender.
In April, the bank said it hired James von Moltke from Citigroup Inc. to replace Schenck as chief financial officer as he moves into his new role as co-head of investment banking and trading with Ritchie, an executive who came up through the equities business.
In the note to employees, Deutsche Bank also said that the corporate finance business will operate as one global business, run by existing regional heads. The bank will soon announce a new head for the division’s corporate banking coverage operation for the Asia-Pacific region, according to the email.
The bank’s institutional client group will be co-headed globally by Kenan Altunis and Stefan Hoops, who will report to Schenck and Ritchie, the email said.
Schenck and Ritchie also discussed the recent decision to create a corporate and investment banking hub, known as CIB Central and headed by Christiana Riley and Lawrence Shaw. The reorganisation of the division support teams is intended to “reduce bureaucracy and complexity, which will achieve substantial cost savings in 2017,” they wrote in the email.
After the reorganisation, which will take effect on July 1, the corporate and investment banking division will comprise six areas, the email said: corporate finance, including corporate banking coverage, global capital markets, global transaction banking, equities, fixed income & currencies and institutional client group. -Bloomberg
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