Tuesday 11 February 2020 10:00 am

Deutsche Bank’s plans to simplify corporate structure win regulatory backing

Deutsche Bank’s plan to simplify its complex corporate structure in Germany has won the backing of local and European regulators, in a boost for boss Christian Sewing’s turnaround plan for the German lender. 

Under the plans, Deutsche will eliminate the separate legal entity that houses its domestic detail operations, known as Deutsche Bank Privat- und Firmenkundenbank AG (PFK), which will be moved within the overall group.

Read more: Deutsche Bank adds investment giant Capital Group as major shareholder

The European Central Bank and German financial regulator BaFin recently “indicated they would support the planned merger”, according to a memo sent to Deutsche staff on Monday.

The restructuring efforts are aimed at “helping to end the duplication of structures and processes and at boosting efficiency”, and Deutsche has said it would make “a significant contribution” to cost cuts.

The attempted simplification of its corporate structure is expected to save the bank €100m (£84.3m) a year, part of a wider plan for Deutsche’s German retail operations to cut annual costs by €1bn over the next three years. 

PFK holds a separate banking licence to Deutsche’s main division, and has its own executive and supervisory boards and its own risk control functions.

As of the end of 2018, the unit employed 34,000 staff and was responsible for around a fifth of the bank’s total assets. 

The lender’s retail operations are central to Sewing’s bid to make Deutsche less dependent on investment banking revenue and to boost alternative revenue sources.

Sewing unveiled his ambitious restructuring plans in July, and updated the bank’s investors on progress in December. 

Read more: Deutsche Bank crashes to massive €5.7bn loss

Late last month, Sewing vowed to “go on the offensive” this year, despite the cost of restructuring efforts pushing the bank to its largest annual loss in five years. 

BaFin declined to comment. City A.M. has contacted the ECB for comment.