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Deutsche Bank Considers Exiting US Cash Equities Business

Courtesy of ZeroHedge. View original post here.

Just two weeks after John Cryan's ouster, Bloomberg reports that, according to people familiar with the matter, Deutsche Bank is considering extensive cuts to its cash equities business in the U.S..

It appears new CEO Christian Sewing is leaving no stone unturned as he continues the wider restructuring of the bank's investment banking division and this would be the first strategic decision under his tenure.

In a first memo to staff, Sewing took a tough line on the bank’s stubbornly-high costs and said the bank will pull back from areas where it’s “not sufficiently profitable.”

The cash equities business has suffered from a transition to automated trading and passive investing, both of which have cut the need for human input into day-to-day equities trading. What business remains has structurally “moved away from banks,” Cryan said on his last quarterly earnings call with analysts in February.

While a spokesperson for Deutsche decline to comment, Bloomberg says a decision could come as early as this week and may be communicated as part of a larger package of changes to the German lender’s securities unit.

As a reminder, Deutsche has €1.3 trillion notional of equity-related derivatives that may become a problem in the absence of a US cash trading business (out of a total of modest €48.3 trillion in gross notional derivatives as of Dec. 31).


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