DB Deutsche Bank Aktiengesellschaft

By Jenny Strasburg and Max Bernhard 

Deutsche Bank AG shares fell Monday as investors digested details of a huge restructuring of the German lender.

Shares were down 1.1% at EUR7.10 having initially risen in early trade.

The German bank said Sunday it expects to post a net loss of EUR2.8 billion ($3.14 billion) as a result of restructuring-related costs when it reports second-quarter results on July 24. It plans about 18,000 global job cuts by 2022. That represents about one out of five current full-time employees.

In a call to reporters on Monday, Chief Executive Christian Sewing declined to give a regional breakdown of the planned cuts but said they wouldn't be concentrated on one region. Mr. Sewing said the investment bank would come out of the restructuring smaller but more stable.

The bank needs to focus on the business areas where it is most competitive, he said. In the past, "we simply spread ourselves too thin, " he added.

Mr. Sewing said the company received a lot of unsolicited interest in the assets that it plans to exit.

The lender, whose share price has been near a record low for months, will focus on serving European companies and retail-banking customers, including wealthy clients. It is aiming to strengthen businesses like asset management, currency trading, corporate-cash management and trade finance that support its narrower focus.

Even though Deutsch Bank's shares had declined on Monday, analysts had generally praised the cuts, calling them deeper than expected, even considering the details that leaked ahead of time. But they also expressed concerns that the bank's targets, including its 8% targeted return on tangible equity by 2022, could be too ambitious.

The bank's home-country disadvantage -- Germany is a low-margin retail market -- and other headwinds pose risks to its plans. Investors and analysts want to know where the bank's planned growth comes from, especially given the gutting of its investment bank, Europe's continued low-interest rates and other headaches specific to Deutsche Bank, including mounting regulatory investigations into potential money laundering.

Deutsche Bank's investment ban will be dramatically shrunk and reorganized with parts of it being put up for sale. Deutsche Bank is shelving its efforts to revive trading businesses that have long struggled to remain competitive.

The bank said Sunday it would exit its global-equities sales-and-trading business completely but will continue offering some services, such as share underwriting, to clients.

The efforts to peddle chunks of functioning operations reflect a stark turn for the European lender that for years has had the biggest global investment-banking ambitions.

Write to Jenny Strasburg at jenny.strasburg@wsj.com and Max Bernhard at Max.Bernhard@dowjones.com

(END) Dow Jones Newswires

July 08, 2019 05:50 ET (09:50 GMT)

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