The plagued largest bank in Germany, Deutsche Bank, makes more efforts to enforce its position in the market. Due to low interest rates and high costs for the implementation of new compliance and AML rules, the banks business model is at risk. The fines that Deutsche Bank agreed to settle for manipulation of the international interbanking interest rate and for selling mortgage-backed securities in the USA created since early 2016 even more stress under investors.
In an effort to reduce costs, Deutsche Bank follows the example of German competitor Commerzbank and ING Bank with a substantial reorganisation. During the summer of 2016 the bank already announced that 3.000 redundancies. In October the number was raised to 4.000, while the total reorganisation in Germany would cost 9.000 jobs.
The International Monetary Fund (IMF) stated recently that Deutsche Bank needs to find a way to convince investors of its viability and that future risks can be minimised. The bank, like many others, struggles with its market position and has to adjust its business model to the current and future standards in order to stay profitable.
Good news for the bank is that the Royal Family of Qatar considers to raise its share in Deutsche Bank from 10 to potentially 25%. The Royal Family seems to be willing to have an impact on the banks conduct. Concerns about the capital position of the bank lowered the value of its stock price significantly.
Credit rating agency S&P rated the bank at BBB+, with a negative forecast. This means that S&P cannot rule out a downwards correction of the rating.