In The Wake Of Its Recovery, Deutsche Bank Faces New Challenges

Famous German lender Deutsche Bank has just recently begun to recover from years of scandals; however, it is now facing new difficulties after its shares crashed on Friday on worries about a deepening banking sector crisis.

‍

Five facts about the bank are as follows:

‍

According to S&P Global Market Intelligence, Deutsche Bank had total assets of 1.3 trillion euros last year, making it the ninth largest bank in Europe.

‍

In 2022, the company with its headquarters in Frankfurt employed close to 85,000 people, with about half working abroad.

‍

The bank, which was established in 1870, for many years served as a significant source of funding for prestigious German businesses as they grew internationally in industries ranging from pharmaceuticals to power electronics.

‍

Its resilience enabled it to weather the banking crisis of 1931, which was brought on by inflation and the closing of foreign markets to German companies.

‍

In an attempt at competing with American investment banks, Deutsche Bank changed its focus during the end of the 1980s, making multiple acquisitions and fostering a culture of greater risk-taking.

‍

Under the direction of Rolf Breuer in the 1990s and Josef Ackermann from 2002 to 2012, Deutsche Bank aimed to compete on a par with the Wall Street heavyweights.

‍

However, due to a lack of diligent control of the bank's operations just on ground during its rapid growth, it was subject to several legal disputes.

‍

It was accused of engaging in unlawful activity, including money laundering.

‍

It reached its lowest point in early 2017 when it paid a $7.2 billion fine to resolve legal claims related to its role in the "subprime" mortgage meltdown, which aided in the onset of the global financial crisis.

‍

Deutsche Bank had to go through two significant reorganization drives after a series of crises involving its corporate finance division before things started to turn around.

‍

The first occurred in May 2018 when Christian Sewing, the newly appointed chief executive, disclosed a plan to eliminate around 7,000 jobs.

‍

Preliminary merger negotiations with Commerzbank, a cross-town rival bank that was also having issues, were held in March 2019. Nevertheless, the plan was scrapped.

‍

Later, in July 2019, Deutsche Bank presented a second, more extensive restructuring plan. By 2022, 18,000 jobs would be eliminated, and the bank will stop participating in the majority of share trading activities in order to concentrate on its German and European operations.

‍

The new approach generally worked, as the bank reported its biggest profit in 15 years in 2022—more than twice that of the year before.

‍

The company's success was supported by revenue growth of 7% to 27.2 billion euros, the highest level since 2016.

‍

But, during the most recent banking crisis, which was brought on by unrest at US regional bankers and the acquisition of Credit Suisse, it has come to the attention of investors.

‍

On Friday, when the price of insurance against the bank failing on its debt increased, its shares fell as much as 14%.

‍

German officials assert that the financial system of the nation is still stable, and Chancellor Olaf Scholz reaffirmed on Friday that there was no need for concern over Deutsche Bank.

‍

At the EU leaders' summit in Brussels, he added that the lender "has modernized and organized the way it operates. It's a very successful bank. There is no cause to be concerned."

‍

In April 2018, Sewing assumed control of the bank following steep declines in its stock price at a time when markets were still skeptical the firm could shift course.

‍

There were questions about whether he was the best candidate for the position given that he was a former employee of Deutsche Bank, had served as an apprenticeship in one of the organization's branches, and had experience in retail banking.

‍

Five years later, though, the CEO, who is now 52, has been given credit for orchestrating a fairly successful comeback. He now has a tenure that lasts through 2026 after it was extended earlier than expected in 2021.

‍

He increased his influence in the financial and political spheres of Germany the same year by being named president of the German private banking lobby.