The König Is Dead; Long Live The König!

0409_DB

Image source: Olga P Galkina / Shutterstock.com

What's going on?

Struggling lender Deutsche Bank fired its CEO and promoted a new one. (tweet this)

What does this mean?

Deutsche’s outgoing CEO has had a tough time of it – the bank made a loss for each of the three years he was in charge (including half a billion euros in 2017). Since the 2007-08 financial crisis, Deutsche has suffered multiple regulatory fines and disappointing financial performance.

The choice of new CEO, formerly in charge of Deutsche’s private banking and commercial lending arms, may signal a change in strategy at Germany’s biggest lender. He may focus on building the savings and loans side of Deutsche at the expense of riskier investment banking activities (e.g. trading stocks and bonds).

Why should I care?

For markets: This could be a new leaf for Deutsche Bank.

Deutsche’s new CEO has worked there since he was a teenager – he clearly knows the business inside out. Investors will hope that he’ll steer the bank back to profitability and a higher share price – its stock is down almost 30% this year alone.


The bigger picture: Banks face a tougher world.

The investment banking rug has been pulled from beneath several big European players since the crisis, and Deutsche may not be the only bank that needs to reinvent itself (it was the world’s biggest bond trader, before that dried up). While others have the luxury of large asset management (UBS) or credit card (Barclays) businesses for now, those business lines will also likely face increasing pressure over the coming years from new challengers.

Originally posted as part of the Finimize daily email.

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