Deutsche Bank

Auf Wiedersehen Universal Banking

db corbis
Deutsche Bank customers could find more closed branches in the future.
  • Why it matters

    Why it matters

    A departure from retail banking would mark a radical strategy shift at Deutsche Bank and has the potential to shake up Europe’s largest banking market.

  • Facts


    • Deutsche Bank is undergoing a strategy review that could lead to it splitting itself in two — an investment bank and a retail bank.
    • The bank is considering three scenarios for a major revamp and is expected to present its decision in the second quarter.
    • Germany, widely regarded as overbanked, is expected to see bank branch numbers cut over a third in the next 10 years.
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For years, closing branches was an alien concept to Deutsche Bank, Germany’s biggest commercial bank. When rival HypoVereinsbank said last year it would shut down 300 sites, Deutsche Bank remarked that it had no such plans. “On the contrary, we’re investing here,” an official said with a hint of pride.

Before Christmas, Rainer Neske, Deutsche Bank’s head of Private and Business Clients, was sounding more cautious. “Branches continue to play an important role but digitalisation does of course have an impact on our physical network,” he said. “The number of branches definitely won’t go up.”

The bank plans radical cutbacks in its retail banking operation as part of a new strategy the management is working on. Hundreds of the 750 domestic and 2,000 foreign branches will be affected, said officials with knowledge of the plans – regardless of which of the three scenarios currently being considered is chosen.

“In the banking sector, synergies between the retail and capital market businesses have always been limited.”

Oliver Mihm,, Head of Investors Marketing

As Handelsblatt reported on Monday, Deutsche Bank is considering either fully integrating its Postbank retail subsidiary, floating it on the stock market or selling off its entire retail banking business lock, stock and barrel, including Bonn-based Postbank.

One reason for such a move is that customer habits, especially among younger banking clients, are changing. They’re simply not going into bank branches anymore, preferring instead to bank online. Mr. Neske’s division made a pre-tax profit of €1.3 billion ($1.4 billion) in 2014, but its return was a slender 6.1 percent.

Management consulting firm Bain & Company estimates the total number of bank branches in Germany will fall to 20,000 from 31,000 over the next 10 years. Commerzbank, Germany’s second-largest commercial bank, has cut its branch network to 1,100 from 1,200. The country’s savings banks shut down 1.5 percent of branches  last year.

Gerhard Schick, financial policy spokesman for the opposition Green party, doesn’t see a threat to the supply of banking services. “People have been saying for years that Germany is overbanked,” he said. “So it’s only logical to make cutbacks in some areas like the branch network.”

In terms of earnings, it would make sense for Deutsche Bank to focus exclusively on corporate business and wealthy private individuals, according to Oliver Mihm, head of Investors Marketing, a Frankfurt-based consultancy. “In the banking sector, synergies between the retail and capital market businesses have always been limited,” he said.

But even if retail banking is jettisoned, pressure will remain for massive cutbacks in the workforce, said one analyst.

Some say the calls to shed retail banking are being driven by the capital market and banking analysts. “This is mainly about selling the stock market a story in order to boost the share price,” said one expert who asked to remain anonymous.

That might work. On Monday morning, the bank’s share price jumped two percent on the news.

But some politicians voiced concern. “Deutsche Bank is evidently pursuing the goal of concentrating on investment banking — precisely the businesses that caused the financial crisis,” said Carsten Sieling, a lawmaker for the Social Democratic Party, which is a junior partner to Chancellor Angela Merkel’s conservatives in the ruling right-left coalition government. “But the surplus capacity the sector complains about in retail banking exists in investment banking as well.”

“People have been saying for years that Germany is overbanked. So it’s only logical to make cutbacks in some areas like the branch network.”

Gerhard Schick,, Green Party Financial Policy Spokesman

Employee representatives in the bank’s supervisory board aren’t climbing on the barricades yet. In fact, they have praised the rethink. “The management board presented the scenarios in great detail and responsibly,” said Alfred Herlin, deputy supervisory board chairman and a member of the Verdi services trade union. “Now we must find the most suitable model for the future of our workforce.”

The bank plans to present its new strategy in the second quarter.

Separately, financial sources confirmed a Financial Times report that Benjamin Lawsky, New York state’s financial services regulator, has added himself to the regulators investigating Deutsche Bank for manipulation of the Libor benchmark borrowing rate.

Deutsche Bank is currently negotiating a settlement with the U.S. Justice Department. When Lawsky gets involved, it usually means two things: it’s going to be expensive, and the fine is likely to come soon.

Insiders say a settlement could come as soon as the second quarter.


Laura de la Motte, Peter Köhler adn Donate Riedel cover finance and economics for Handelsblatt. To contact the authors:, and

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