Deutsche Bank Restart: Goodbye Goldman Sachs of Europe?

Abstract

This public-sourced case describes the latest restructuring efforts by Deutsche Bank (DB) and gives a short history of prior restructuring efforts from the decade before. In July 2019, Christian Sewing, the new CEO of DB, announced a series of measures that included, among others, the elimination of global equity trading, the layoff of 18,000 employees, the creation of a "bad bank" to transfer noncore assets, and the suspension of dividends until 2022. The case describes key decisions a bank CEO makes when a bank needs to change course to return to profitability and growth. The case offers an opportunity to debate these key decisions, as well as discuss some of the prior ones during earlier restructuring efforts, and put the students in the CEO's shoes: What would you do and why? The case also describes key banking performance metrics (e.g., ROE, ROA) and other critical variables such as those reflecting capital health (Tier 1 ratio), as well as gives an overview of the bank business model and factors impacting bank profitability and value. Excerpt UVA-F-1934 Feb. 26, 2020 Deutsche Bank Restart: Goodbye Goldman Sachs of Europe? What is our north star, when reshaping Deutsche Bank? –CEO Christian Sewing In July 2019, on a day of massive employee layoffs at Deutsche Bank—mostly in its equity sales and trading business—two executives made headlines for having new USD1,800 suits fitted at the office. Their out-of-touch leadership behavior did little for the struggling German bank's reputation. And it drew the ire and a phone call from CEO Christian Sewing. "In no way is this behavior in keeping with our values," Sewing said. "I assume in any case that the two colleagues will not forget my telephone call." (See Appendix1 for the company's mission statement.) . . .