Deutsche Bank to cut its US equity and trading units, creating a €50 billion ‘bad bank’

Deutsche Bank is readying a revamp and may shut or slash all equity and trading business outside of Europe, according to a report Sunday in the Financial Times newspaper.

The Financial Times reported that in its overhaul the company is introducing a “bad bank” to hold tens of billions of euros of assets and shrinking or shutting its U.S. equity and trading businesses.

The bad bank would house or sell assets valued at up to 50 billion euros ($56.06 billion)- after adjusting for risk – and comprise mainly long-dated derivatives.

The creation of the bad bank – a tactic used by failed UK banks after the 2008 crisis – would enable chief executive Christian Sewing to shift the lender away from the highly profitable but risky world of investment banking and focus instead on mainstream banking and private wealth management.

As part of the restructuring, the lender’s stocks and interest rates trading units outside continental Europe would be shrunk or closed entirely, the report said with the US expected to be hit the hardest.

The bank’s overhaul could involve major job losses in the UK, where it employs 8,500 people, and the US where it has around 10,000 staff.

Via The Financial Times