Inside Deutsche Bank's cuts: Christian Sewing's private letter to staff

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It's happening. Following today's board meeting, Deutsche Bank has announced that it will be exiting global equities sales and trading and significantly cutting its corporate and investment bank. Risk weighted assets allocated to the fixed income business are to be cut by 40% and rates trading in particular will be slimmed down. A 'bad bank' comprising €74bn of risk-weighted assets is to be formed and "wound down quickly". Garth Ritchie is out. So, it seems, is Yanni Pipilis. Bloomberg originally reported that James Davies was going too, but now it seems he may be staying after all.  The investment bank will in future be run by Mark Fedorcik; Ram Nayak will head fixed income and currency sales and trading. 

So much is already known. However, Sewing has also today sent a private letter to staff on the cuts in which he says he regrets the "impact" they will have on some employees as Deutsche enters the "next phase."

"I will stress... that what we have announced today is nothing less than a fundamental rebuilding," says Sewing. In future, he says the investment bank will connect, "corporate clients with capital markets worldwide," and will focus on areas in which the bank has, "longstanding expertise - credit, fixed income and currencies, as well as strategic advice."

The implication, then, is that jobs in these areas (rates desks excepted) will be safe. In an earlier announcement, Deutsche said it will retain a, "focused equity capital markets operation," suggesting that some ECM jobs will be retained too, along with research in what are apparently being referred to as "priority sectors" and a "targeted" distribution capability.

Also in today's letter to employees, Sewing says Deutsche will be increasing its investment in technology by €13n between now 2022, whilst appointing former SAP executive Bernd Leukert to a board role responsible for "digitalisation data and innovation." Meanwhile, Sewing says that Franke Kuhnke will do "what he does better than anyone else," and simultaneously cut other infrastructure spending in order to reduce costs by another €6bn (25%) by 2022.

The transformation has occasioned "uncomfortable decisions," says Sewing, adding that he appreciates that, "this impacts people and affects their lives in a profound way," and that the decision, "has not been easy."

In future, Sewing says Deutsche will have a new culture. "A cutlure that enables rather than prevents. A culture that always puts the bank and its clients first, before the interests of the individual. A culture where integrity and teamwork are core values...and where extraordinary talented people want to work."

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