Deutsche Bank boss writes to staff after flow of ‘bad news’ hits German lender
It follows a credit downgrade and reports over its ‘troubled’ US subsidiaries.
Deutsche Bank’s boss has tried to reassure staff just hours after the lender suffered a credit downgrade and was knocked by reports that its US subsidiaries were in “troubled condition.”
In a message sent to bank employees on Friday, chief executive Christian Sewing said there was “no reason for us to be discouraged,” despite the bank’s share price having hit a historic low.
“Let’s be straightforward: the newsflow is not good,” he said, admitting that it “must give you the feeling that the bank is not getting any respite”.
“That’s why I think it’s important for me to put this news in perspective.”
His message came just hour after S&P downgraded the bank’s long-term rating to BBB+ from A- citing “significant” risks in its ability to deliver its restructuring plan amid an “unhelpful market backdrop.”
Mr Sewing said at the group level “our financial strength is beyond doubt,” and highlighted that all of its ratings were still in investment grade territory.
“S&P does not base its decision on any doubts about the strength of our balance sheet. Rather, we are quite simply not profitable enough,” he said.
The last few years were tough. Many of you are sick and tired of bad news. That’s exactly how I feel. Christian Sewing, Deutsche Bank CEO
He said the bank now has to deliver its updated strategy “speedily and rigorously”.
The bank announced just last week that it was slashing more than 7,000 jobs as part of the new chief’s turnaround strategy that will reshape its trading and investment bank and refocus on its European and German customer base.
Mr Sewing also addressed reports that over a year ago, the US Federal Reserve downgraded three of Deutsche Bank’s American subsidiaries and classified them as being in “troubled condition.”
He said the lender has been engaging with US regulators to address weaknesses in internal controls and infrastructure.
“These weaknesses have arisen over many years. As you know, we have made progress in remediating them in the past year.
“We’re not yet where we want to be, but we’re steadily getting there,” Mr Sewing said.
“The last few years were tough. Many of you are sick and tired of bad news. That’s exactly how I feel,” he added. “But there’s no reason for us to be discouraged.
“Yes, our share price is at a historic low. But we’ll prove that we have earned a better valuation on the financial markets. Now we need to look forward”.
Mr Sewing has been at helm since April, when he took over from British boss John Cryan who was sacked by the bank after three years of losses.
The new strategy marks a retreat from decades of global expansion in which the bank sought to compete with Wall Street titans Goldman Sachs and JPMorgan.
Deutsche Bank shares rose as much at 4% on Friday morning.