Deutsche Bank shares tumble after new strategy announcement

German banking group Deutsche Bank has seen its shares tumble after it unveiled a plan today (April 27th) to cut costs by €3.5 billion (£2.5 billion). The group's equities slipped 4.9 per cent in the morning session. The new strategy is designed to boost its financial strength to meet new regulatory requirements.

The bank said it will close up to 200 High Street branches by 2017 and leave or reduce its presence in several countries. It also plans to reduce its investment banking arm, and to sell off its retail business Postbank through a stock-market listing by 2016.

It also plans to increase its ratio from 3.4 per cent to at least five per cent, putting it in the same league as US rivals such as Goldman Sachs and well ahead of European requirements, according to the Financial Times.

“Regulation has been tough for the last number of years. We are under no illusions, we think that will remain a key challenge,” said Anshu Jain, co-chief executive, at a news conference in Frankfurt.

The bank was fined $2.5 billion

On Sunday, Deutsche Bank said that net income for the first quarter had fallen by 50 per cent to €559 million due to legal costs and regulatory fines. The results came just days after the bank was fined $2.5 billion by US and UK regulators ($2.1 billion and £227 million respectively) for trying to manipulate interest rates.

Between January 2005 and December 2010, trading desks at Deutsche Bank manipulated its IBOR submissions across all major currencies. This misconduct involved at least 29 Deutsche Bank individuals including managers, traders and submitters, primarily based in London but also in Frankfurt, Tokyo and New York.

Deutsche Bank said in a statement that it had "disciplined or dismissed individuals" involved and tightened governance controls. However, US regulators have demanded the dismissal of a further seven senior individuals still employed.