CORPORATE bosses hope for a bump in their share price when they present a new five-year plan. Deutsche Bank’s leaders had no such luck on April 27th: their “Strategy 2020” was met by a 10% tumble over three days, reversing a six-week climb propelled by expectations of a more radical overhaul.
Deutsche’s new tack is to do a little less of most things. Postbank, a German retail bank it only finished buying in 2012, will be spun off through a relisting. Deutsche will leave up to ten of the 70 countries it does business in. Its dominant investment bank will be trimmed a little, too. Instead, it will invest more in its asset-management arm.
The board of Deutsche had been mulling a far more daring plan to split the bank in two: a staid retail lender including Postbank and Deutsche’s own-brand branches on one hand, and an emancipated investment bank on the other. On the face of things that should have appealed to regulators, who have pushed lenders to isolate “casino-like” activities from their deposit-taking arms. Their refusal to allow Deutsche to use Postbank’s deposits to fund its investment bank undermined the entire rationale for its purchase—hence the reversal.
But regulators do not seem to like the idea of a European version of Goldman Sachs, either. Even fans of the idea admit that a stand-alone investment bank would probably have struggled to...
from The Economist: Finance and economics http://ift.tt/1Ev5yXf
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