The major Swiss bank had to cope with a loss of CHF 1.6 billion in the second quarter.
(Photo: Reuters)
Europe has a new crisis bank. At least since the recent multi-billion dollar quarterly loss and the abrupt departure from CEO Thomas Gottstein, it has been clear that Credit Suisse has taken over this title from Deutsche Bank. The Frankfurt money house is not yet where it should be and where it wants to be. But at least investors no longer have to ask themselves whether Deutsche Bank is making money, only how much it will be.
Credit Suisse is roughly in the position Deutsche Bank was in in 2019. It is finally clear that the Swiss cannot go on like this. It is obvious that the big bank needs a new strategy. And it’s clear that the inevitable remodeling will be quite painful.
The problem is: These findings are not enough. It has taken Deutsche Bank long years to put the analysis into practice, wearing out three CEOs and repeatedly changing strategy. On the one hand, because the bank was repeatedly caught up in its scandals – another parallel to Credit Suisse – and on the other hand because it was a long time since it really managed to switch to restructuring mode.
Obviously, it’s extremely difficult for an organization that has long focused on growth and success to realize that the good years are over and that it’s time for hard saving and downsizing. If you can no longer keep up in the first league, sometimes the only thing that helps is relegation to the second in order to push ahead with the rebuilding there and hope for as soon as possible promotion again.
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At least at the beginning of his tenure, Deutsche Bank boss Christian Sewing managed, with meticulous work, to commit the bank to its restructuring course, with all the sacrifices that required. Now, however, the bank has finally conceded its cost target for the major renovation, which is scheduled to run until the end of this year, and has called the return targets into question. This acknowledgment shows that while discipline is a necessary condition for successful restructuring, it is not sufficient. Deutsche Bank also needed luck and a bit of opportunism. Without the special boom in trading in bonds, foreign exchange and derivatives, which has been going on almost since the outbreak of the pandemic, Sewing would hardly have been able to lead the bank back to acceptable returns. Ultimately, it was the investment bankers who saved the conversion project with their profits. Sewing actually wanted to reduce its dependency on this volatile division.
More: UBS is feeling the effects of the downturn