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 Cryan said the bank will sacrifice its 2015 and 2016 dividends as it
seeks to bolster its finances and retain money to pay for sins of
the past. "I do not think that 2016 and 2017 will be strong years,"
he told reporters on Thursday.
Shares in the bank were down 6 percent at 25.815 euros by 0850 GMT.
"We still believe there are major risks here and therefore think a
capital increase in 2016 is still highly probable," Citi analysts
said in a note.
A trader said: "Investors are very disappointed. Two years of no
dividends and CEO Cryan cautions 2016 and 2017 won’t be strong in
terms of business either. That’s a long time and shareholders are
wondering why they should stay invested."
Cryan is under pressure to overhaul Germany's biggest bank, with
costly litigation from past scandals and fallout from a market rout
in Asia pushing its valuation well below rivals.
"Deutsche Bank does not have a strategy problem. We know exactly
where we want to go. But we have had a grave problem in implementing
it," Cryan said, addressing reporters in German, in contrast to his
predecessor Anshu Jain who regularly drew criticism for never
mastering the language.
Cryan said staff will feel the pain. "I have said that it would not
be all sweetness and light," he said, adding it would be
unacceptable not to share some of the cost of the settlement of
interest-rate rigging and consequences of poor past behavior.
In the context of the group making a 2015 loss, its supervisory
board will discuss if it will be appropriate for the board to pay
bonuses, he said.
Co-CEO Juergen Fitschen acknowledged the bank has not yet done
enough in changing its behavioral culture. "Cultural change ... it
needs to be filled with content. What we have brought about is only
the beginning," Fitschen said.
The lender is to axe 9,000 full-time jobs and 6,000 external
contractor positions. Three quarters of the other 20,000 jobs to go
are at retail unit Postbank <DPBGn.DE>, which Deutsche Bank is
spinning off.
"We were concerned that our shareholders thought cost-cut goals were
not ambitious enough. We think they are realistic based on the need
to remain competitive," Cryan said.
"We think we should retain capital in order to strengthen the
company. Because we have to run business on the basis that we could
encounter stress. We need to build a buffer above the minimum."
ELIMINATION OF DIVIDEND
Deutsche Bank said late the previous day it was targeting a
reduction of its risk-weighted assets to about 320 billion euros
($349 billion) by end-2018 from 416 billion at the end of June,
towards the top end of analysts' expectations.
"The plan is based on the elimination of the Deutsche Bank common
share dividend for the fiscal years 2015 and 2016," it said in a
statement, adding it aimed to resume paying dividends thereafter.
[to top of second column] |
Ever since its post-World War Two reestablishment in 1952, Deutsche
Bank has always paid a dividend.
Earlier this month, the lender announced it would split its
investment bank in two and part ways with three of its eight
management board members.
The bank also said it was aiming to bring down adjusted non-interest
expenses to less than 22 billion euros by 2018 from 23.8 billion in
2014, and to reduce its cost/income ratio to 70 percent in 2018 from
84.3 percent at the end of June.
By comparison, Barclays, Credit Suisse and UBS, which are also
cutting costs and devising new strategies, currently only spend 64
to 77 cents to earn a euro.
Other major international banks such JP Morgan and UBS made
swifter changes to address persistently low interest rates and
tighter regulation after the financial crisis.
While Credit Suisse, which also intends to slim down its investment
bank, plans to raise 6 billion Swiss francs ($6 billion) from
investors to bolster capital, Deutsche Bank has not so far signaled
it is considering such a step.
Deutsche Bank also posted a 20 percent rise in revenue at its
lucrative bond trading business in the third quarter, helping take
the sting out of a record 6 billion euro group pretax loss.
Revenue at its Corporate Banking and Securities business rose 2
percent to 3.2 billion euros, helped by higher revenue in rates,
credit and distressed and emerging markets.
Peers such as Morgan Stanley and Goldman Sachs reported steep
declines in bond trading performance in the quarter.
The loss was caused by massive charges for goodwill and legal
expenses at its investment bank and on assets earmarked for
disposal, as well as higher litigation charges.
(Reporting by Arno Schuetze and Jonathan Gould; Editing by Georgina
Prodhan and David Holmes)
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