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Deutsche Bank (DB) to Divest Portugal PCB Business to ABANCA

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Deutsche Bank Aktiengesellschaft (DB - Free Report) has agreed to divest its Private & Commercial Banking (“PCB”) business in Portugal to ABANCA Corporación Bancaria S.A. Though, the financial terms of the deal were not disclosed, it is expected to be completed by the first half of 2019.

The deal is in line with the German lender’s strategy to streamline operations to keep costs under control and improve its financial health. Also, it would enable the bank to focus on profitable business operations.

Deutsche Bank’s PCB segment will remain an integral part of its business. Also, the bank ensured that it will continue serving its clients in Portugal with its Corporate & Investment Banking segment, which provides commercial banking services to Portuguese and international corporate clients, financial institutions and government agencies.

Based in Northwest Spain, ABANCA provides financial services to small and medium enterprises in Portugal through four branches. ABANCA considers this deal as part of its international strategy to strengthen its presence in Portugal and grow in the strategic segments, which will complement its existing business.

Amid efforts to uplift the bank’s financial position and restructuring initiatives, investors at Deutsche Bank are looking for a potential candidate to replace the present CEO, John Cryan. However, shareholders lost confidence when the bank reported annual loss for 2017 and their dissatisfaction continued over the progress of Deutsche Bank’s turnaround.

Per The Times, Cryan and James von Moltke, the bank’s chief financial officer, had faced a bitter board meeting while discussing the bank’s future, arguing for a more radical restructuring that included a complete overhaul of its investment banking division. Also, strained relationship between Cryan and chairman Paul Achleitner is a major reason behind the CEO’s replacement.

The fate of Deutsche Bank remains uncertain as the interest rates continue to remain at low levels and affect its revenues. Also, poor performance of its investment banking division is a major concern. Further, involvement in legal hassles continues to hurt its reputation.

Shares of Deutsche Bank have declined 21% over the past year on the NYSE against 8.9% growth recorded by the industry.

Deutsche Bank carries a Zacks Rank #5 (Strong Sell).

Some better-ranked stocks in the same space are ING Group, N.V. (ING - Free Report) , BanColombia S.A. (CIB - Free Report) and The Toronto Dominion Bank (TD - Free Report) . All these stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for ING Group has been raised 2.4% for the current year, in the last 60 days. The company’s share price has jumped 11% in the past year.

BanColombia has witnessed 7.3% upward earnings estimate revision for 2018, in the last 60 days. Its share price has risen 3.6% in the past year.

Toronto Dominion’s shares have gained 13.4% in a year and its earnings estimates for 2018 have moved up 5% in the last 60 days.

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