By DAVID McHUGH
FRANKFURT, Germany (AP) — Deutsche Bank will take another step back from its decades-long global expansion, announcing Thursday that it will focus its investment banking business more on Europe and reduce operations in the U.S. and Asia.
The bank made the announcement after reporting a fall in net income to 120 million euros ($146 million) in the first quarter. The figure was short of analyst expectations for 374 million euros and down sharply from 575 million euros a year earlier.
That was nonetheless an improvement from a 2.4 billion loss in the last quarter of 2017, when the company had a large one-time loss related to tax changes in the U.S. First-quarter revenues fell 5 percent to 6.98 billion euros ($8.5 million). The bank said much of the decline resulted from the euro’s rise against the dollar.
Germany’s largest bank replaced CEO John Cryan April 9 after three straight full-year losses and slow progress in cutting costs and streamlining the bank’s operations.
New CEO Christian Sewing said in a statement that some areas of the bank’s business had done well in the first quarter, such as its DWS asset management business and some areas at the investment banking division.
“However, we are not strong enough in other areas of this business,” he said. “Therefore we have to act decisively and to adjust our strategy. There is no time to lose as the current returns for our shareholders are unacceptable.”
Deutsche Bank said that the investment banking business would be aimed at its core European client base and on underwriting and financing areas in which it has a strong competitive position against other banks. Business focused on just the United States or Asia would be reduced.
The bank said it would cut back on rates sales and trading in the U.S. and shrink its global equities trading business, retreating from its international expansion over the past several decades. The move comes on top of a previous announcement that it was pulling out of several less profitable countries.
It is still committed to investment banking, which involves advising companies on mergers and acquisition, helping them raise money by issuing shares and bonds, and trading in securities. But the bank stressed that its focus would be on providing those services to companies “whose activities are closely aligned with the strengths of the German and European economies.”
The changes would mean more stable revenue sources from steadier kinds of business such as retail banking and its asset management business, the bank said.
It said there would be job cuts but did not say how many or where.
The Frankfurt-based bank also said it would slim the top management body to nine executives from 12 and eliminate the practice of having co-heads of departments in an effort to speed decision-making.
Cryan became CEO in 2015 and led the bank through its efforts to cut costs and resolve legal misconduct cases that cost the bank billions, including a $7.2 billion settlement with U.S. authorities over securities based on mortgages to people with shaky credit. Progress was slow and though the bank restored its dividend last year, shareholders got only 11 cents per share.