Handelsblatt Interview Deutsche Bank May Not Offload Postbank in 2017

Deutsche Bank will finally turn the corner this year, although it may not find a buyer for its retail unit Postbank in 2017, the bank’s head of private and commercial clients, Christian Sewing, tells Handelsblatt in an interview.
Christian Sewing is Deutsche Bank's youngest board member.

Deutsche Bank still wants to sell its retail unit Postbank but may not be able to do so in 2017 and it may change its mind about the sale if conditions change, management board member Christian Sewing told Handelsblatt.

“Postbank is up for sale but the price must be right,” said Mr. Sewing, the bank’s head of private, wealth and commercial clients. “The market environment wasn’t right for it last year and I’m not sure whether it will be in 2017.”

Asked whether Deutsche Bank might be tempted to reintegrate Postbank instead of selling it, he said: “Two years ago we made no secret about why we want to sell Postbank. It was driven by regulation and the capital situation. But that also means that a sale would have to improve our capital situation.”

Asked whether that meant Deutsche Bank would keep Postbank if it could afford to, he said: “If the assumptions or the environment change, you’re always well advised to review your decisions. But at present Postbank is up for sale, but the price must be right.”

There has been speculation that Deutsche Bank may consider re-integrating Postbank because bids haven’t been high enough.

Last week financial sources told Handelsblatt that Deutsche Bank may sell part of its asset management unit instead to raise much-needed capital through a partial initial public offering. But no final decision has been taken yet.

You have to act on the fact that 43 percent of customers only go to their branch once a year and tell us they want to do their banking when it makes sense to them Christian Sewing, Deutsche Bank

Mr. Sewing sounded upbeat about Deutsche Bank’s outlook. Asked if 2016 might be a turnaround year for the bank, which is restructuring to boost its anaemic earnings and capital in the face of rock-bottom interest rates and billions of euros in legal costs, he said:

“Yes, and in two respects. Firstly because the restructuring is on a clean foundation. But secondly there’s also a turnaround in sentiment: as challenging as the months September and October were, the events welded the team together in a way I haven’t seen in the last 20 years. That’s especially important to us.”

He was cautiously optimistic that  Deutsche Bank could return to profit this year, saying: “I am confident that we will become sustainably profitable again. That is our goal at any rate.”

He gave no clear answer on whether Deutsche Bank would resume dividend payments after scrapping the 2015 and 2016 payouts as part of its overhaul.

“We first have to see how the future capital rules will look for us, they haven’t yet been negotiated to completion,” he said. “Only then will we be able to assess our capital situation and decide what that means for the dividend.”

Asked if Deutsche Bank will only then know whether it will require a capital hike, he said:

“There are still some uncertainties. Only when these have been removed will we know what exactly our capital base looks like in the long term. At present we’re comfortably meeting all capital requirements.”

Mr. Sewing, born in 1970, is the youngest member of Deutsche Bank’s management board but has spent longer at the bank than any of his peers, having worked there for almost his entire career so far. The former risk manager has been in charge of private and commercial clients business for a year and a half.

His task is to shed almost 3,000 jobs in his division, close 188 of the 723 branches and boost the bank’s digital business. He said the bulk of that task will have been completed by June.

Rival Commerzbank is taking a starkly different approach: it’s not shutting any branches, and it’s enjoying rapid business growth and higher earnings than Deutsche.

Asked to comment, Mr. Sewing said: “The bank branch isn’t on its way out. For certain things there will continue to be branches and personal consultancy in the next 10 years. But you have to act on the fact that 43 percent of customers only go to their branch once a year and tell us they want to do their banking when it makes sense to them. We’re catering for that digitally, via our branches and with the eight new advice centers. Overall, we’re more present overall with our new structure.”

Still, Commerzbank is more profitable and it’s growing. Mr. Sewing said: “First let’s wait and see please. Secondly we’ve deliberately positioned ourselves differently from Commerzbank. And thirdly a comparison with Commerzbank only makes sense once we have completed our restructuring, meaning from July. Besides, we had set ourselves a goal of not losing any customers despite the restructuring. We’ve succeeded in that. On a net basis we’ve even gained customers abroad and with Norisbank.” The retail bank Norisbank, a Deutsche Bank unit, has no branches and offers only online and telephone banking.

Asked if he could rule out that Deutsche Bank may cut more jobs than planned so far, Mr. Sewing said:

“For us it’s important that we fully implement our plans first. But of course we’re looking closely at how the economic environment develops.”

He said Deutsche Bank’s decision to cut its bonuses drastically for a quarter of the bank’s approximately 100,000 staff was meant as a signal both to the outside world and internally.

“If you don’t pay a dividend, you have to make shareholders believe that we are also playing our part, especially given that we unfortunately have to part company with many employees. That’s also a matter of decency.”

He said the management board had decided unanimously to cut bonuses. “The only question we asked ourselves was whether we might be sending the wrong signal to staff and the competition.”

Asked what he meant, he said: “Well, one could also interpret it differently: the bank can’t even afford bonuses any more. This question was discussed of course but the other arguments clearly predominated. But there’s a certain irony in the decision: of all years, individual performance isn’t being honored in a year in which we all — and I really mean the bank’s entire staff — have objectively worked harder than ever before.”

He said the bank could have afforded bonus payments. Asked where the change in mentality was coming from, he said: “In the management board and in the management level beneath it, everyone is saying to themselves that these are strenuous years but we are absolutely convinced that this bank has a long-term future and we want to invest in it. This culture is prevailing more and more.”

 

Sven Afhüppe is the editor in chief of Handelsblatt. Daniel Schäfer is head of Handelsblatt's finance pages and based in Frankfurt. To contact the authors: [email protected] and [email protected]