A sale of Postbank, purchased as Europe reeled under the financial crisis, would represent a major reversal for Deutsche bank, which had sought to diversify its earnings away from volatile investment banking
Postbank-branded retail unit, say sources; shares underperform sector in 2014; Deutsche says irresponsible to speculate on sale of any unit
Deutsche Bank will review its strategy and profit targets next year and may sell its Postbank-branded retail unit, in a major reversal as a hoped-for turnaround in profitability slips out of reach.
The bank said yesterday it would update strategic targets in 2015 as its three-year-old plan came to an end, heralding an overhaul of the roadmap that aimed to make it Europe’s last investment bank with a global footprint.
The bank’s comments come after Manager magazine said Deutsche was considering a possible Postbank sale. Two people close to the bank’s strategic thinking, who declined to be named, confirmed it was mulling the sale of the retail network.
Germany’s biggest lender said it would be irresponsible to speculate on the sale of any business and declined further comment.
The magazine said big shareholders including a Qatari investor, with 5.8%, had expressed displeasure with progress in the group’s turnaround led by co-chief executives Anshu Jain and Juergen Fitschen.
No-one could be reached for comment at the public relations agency which deals with matters relating to the Qatari investor.
Manager said the shareholder disquiet could lead Deutsche to make changes including the sale of its Postbank division, purchased between 2008 and 2009. Spain’s Banco Santander would be an interested buyer, the magazine said.
Santander declined to comment.
A sale of Postbank, purchased as Europe reeled under the financial crisis, would represent a major reversal for the bank, which had sought to diversify its earnings away from volatile investment banking.
Overhauling the group’s profit targets, unveiled in 2012 and diluted once already in 2014, would also represent a major setback for Jain and Fitschen, who have had to contend with heavy costs for fines and settlements for activities.
The targets have slipped increasingly out of reach, leaving investors frustrated. They have seen returns diluted by a $12bn rights issue this year as Deutsche restocked its balance sheet ahead of European stress tests.
Deutsche’s return on equity of less than 3% in the first nine months of this year was well below the 12% it aims to reach in 2016 and a far cry from the 20% returns enjoyed before the crisis.
Deutsche’s investment banking strategy calls for it to vacuum up activities abandoned by retreating European competitors. But with interest rates set to remain at record lows for some time in Europe, the plan has turned into an expensive waiting game for investors.
Shares in the bank, which dropped on Tuesday to a two-month low and which in October fell to their lowest since 2012, were up 3.3% by 1147 GMT versus a 2.1% rise in the European sector.
But the shares have fallen 23% this year compared with a 4% fall in the sector.
