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Deutsche Bank's Postbank IPO on Hold, Seeks "Creative" Exit
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In a bid to boost capital levels, Deutsche Bank AG’s (DB - Free Report) efforts to deconsolidate its retail unit – Deutsche Postbank AG – seem to get further delayed. John Cryan who took over his position as the sole Chief Executive Officer (CEO) of the bank after Jürgen Fitschen stepped down as Co-CEO earlier this month, is looking for “creative” solutions to exit Postbank.
Citing Cryan’s remarks at an investor conference in New York on Tuesday, a report by Bloomberg stated that the company’s previous plan for an initial public offering of Postbank is currently on hold.
The report quoted Cryan saying, “We could proceed with an IPO – unfortunately we don’t want to right now because I don’t think the price that we would get would be attractive for our shareholders.” He further added, “We’re either hoping for a market recovery there or looking for slightly more creative ways to exit the division. But the bank is for sale – so if you know anyone who wants to buy a German retail bank, let me know.”
The CEO also noted, “We’ve bought ourselves a bit of time, we anyway don’t really need to sell this until 2018. Then when the inflation comes through from Basel III in full force, it would be useful to have shed ourselves of that leverage and those risk-weighted assets.”
In a strategic move to reduce dependency on investment banking and generate revenues from retail banking, Deutsche Bank acquired a stake in Postbank in 2008, which gradually increased to 96.8% as of Sep 2015. Headquartered in Bonn, Postbank with around 19,000 employees has about 14 million customers and €148 billion of assets.
Cryan also separately stated that most of the restructuring will be done by the end of the year. He further added that focus will remain on trading businesses, given the current market environment, with downward trend in client volumes.
While Cryan is expediting efforts to revamp the bank and boost profitability, the litigation headwinds are not likely to ease soon as the bank continues to struggle with numerous lawsuits and regulatory proceedings. Notably, year to date, Deutsche Bank lost around 25% on the NYSE to $17.80.
Deutsche Bank currently carries a Zacks Rank #5 (Strong Sell). Some better-ranked stocks in the foreign banks include Canadian Imperial Bank of Commerce (CM - Free Report) , Bank of Montreal (BMO - Free Report) and Shinhan Financial Group Company Limited (SHG - Free Report) , each sporting a Zacks Rank #1 (Strong Buy).
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Deutsche Bank's Postbank IPO on Hold, Seeks "Creative" Exit
In a bid to boost capital levels, Deutsche Bank AG’s (DB - Free Report) efforts to deconsolidate its retail unit – Deutsche Postbank AG – seem to get further delayed. John Cryan who took over his position as the sole Chief Executive Officer (CEO) of the bank after Jürgen Fitschen stepped down as Co-CEO earlier this month, is looking for “creative” solutions to exit Postbank.
Citing Cryan’s remarks at an investor conference in New York on Tuesday, a report by Bloomberg stated that the company’s previous plan for an initial public offering of Postbank is currently on hold.
The report quoted Cryan saying, “We could proceed with an IPO – unfortunately we don’t want to right now because I don’t think the price that we would get would be attractive for our shareholders.” He further added, “We’re either hoping for a market recovery there or looking for slightly more creative ways to exit the division. But the bank is for sale – so if you know anyone who wants to buy a German retail bank, let me know.”
The CEO also noted, “We’ve bought ourselves a bit of time, we anyway don’t really need to sell this until 2018. Then when the inflation comes through from Basel III in full force, it would be useful to have shed ourselves of that leverage and those risk-weighted assets.”
In a strategic move to reduce dependency on investment banking and generate revenues from retail banking, Deutsche Bank acquired a stake in Postbank in 2008, which gradually increased to 96.8% as of Sep 2015. Headquartered in Bonn, Postbank with around 19,000 employees has about 14 million customers and €148 billion of assets.
Cryan also separately stated that most of the restructuring will be done by the end of the year. He further added that focus will remain on trading businesses, given the current market environment, with downward trend in client volumes.
While Cryan is expediting efforts to revamp the bank and boost profitability, the litigation headwinds are not likely to ease soon as the bank continues to struggle with numerous lawsuits and regulatory proceedings. Notably, year to date, Deutsche Bank lost around 25% on the NYSE to $17.80.
Deutsche Bank currently carries a Zacks Rank #5 (Strong Sell). Some better-ranked stocks in the foreign banks include Canadian Imperial Bank of Commerce (CM - Free Report) , Bank of Montreal (BMO - Free Report) and Shinhan Financial Group Company Limited (SHG - Free Report) , each sporting a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>