deutsche bank: winning in a changed environment · 2015-08-31 · deutsche bank jürgen fitschen,...

financial transparency. Jürgen Fitschen, Anshu Jain Investor Day, Frankfurt, 11 September, 2012

Deutsche Bank

Press conference, Frankfurt, 11 September 2012

Deutsche Bank

Deutsche Bank:Winning in a changed environment Jürgen Fitschen and Anshu Jain,Co-Chairmen of the Management Board and the Group Executive Committee

Deutsche Bank Jürgen Fitschen, Anshu Jain Press conference, 11 September 2012

financial transparency.

Agenda

9/25/2012

1

Vision

1 Operating environment

Operational excellence and financial aspiration

2

4

Cultural change5

Strategy 2015+: recalibrating the Bank3

Summary6

Deutsche Bank financial transparency. Jürgen Fitschen, Anshu Jain Press conference, 11 September 2012

We face a challenging medium-term environment

2

Continued dependence on policy stimulus

Significant, prolonged deleveraging ahead

Changing global demographics

Urbanization and financial deepening in emerging markets

Fractured relationship with society

Restrictive regulatory landscape

Transformation of competitive landscape

Technological advancements

Megatrends drive significant

opportunities

Unprecedented pressure on banks

Low growth; further potential for shocks

Macro-economic challenges


In this environment, the banking industry shrinks…

3

1990s 2011

Has shrunk in previous crises…Share of total assets held by second tier banks in Japan(1)

Number of commercial banks in the US

1929 1933

~ 20,000

~ 10,000

~(50)%

~(20)ppt

60%

40%

Number of banks by geography

(33)%

2011

7,358

2006

8,680

1997

10,924(34)%

6,6787,345

10,043

(45)%

1,8982,050

3,420

…and is shrinking now

EU 15

201120061997 201120061997

(1) Denotes banks outside of the top 5Source: Japanese Bankers Association, FDIC, ECB, DB Research


…and winners emerge

4

36

44

12

40

13

Investment banking(2)

Asset & Wealth Management(3)

Transaction banking(4)

51

(1) Subject to conclusion of domination agreement (2) Top 5 in FICC, equities, advisory; based on revenues; 2007 vs. 2011(3) Top 5 within top-20 global asset managers; based on AuM; 2007 vs. 2011 (4) Top 5 in transaction banking (incl. security services); based on revenues; 2008 vs. average 2010/2011 Source: Bloomberg, annual reports, IR websites, DB Research

(1)

% of business accruing to the top 5 firms

Pre-financial crisisPost-financial crisis

Global integrated firms survive… …and capture increased share of businessMarch 2008 Today



Clients will define future winners

5

Increasingly complex client needs… …define attributes of future winners

World-class financial strengthPrudent risk management

Sustainable fundingAsset gathering capability

24/7 access to liquidity globally

Access to worldwide markets

Trusted advice

Risk solutions

Trade facilitation

Wealth preservation and growth

Payments / flow of fundsSuperior client solutions

Diversified solutions providerAbility to deliver around the world

Flexible resource allocation

Culture of responsibility and excellence

Responsible product innovationNew balance of risk / reward

Operational excellence



Agenda

6

Vision



2

4

Cultural change5


Summary6



What is Deutsche Bank’s starting point?

7

Unique strengths… …and identified weaknesses

Long-term underperformance of some businesses

Core Tier 1 ratio weaker than peer average

Historical lack of earnings balance

Industry’s challenges with society

Significant potential for better cost efficiency

Deep roots in Europe’s strongest economy and long presence in EM

Strong funding position

Unique brand, IB franchise and undisputed home market leader

Prudent risk management

Strongly entrepreneurial, internationally diverse culture


8

Our vision

We aspire to be the leading client-centric global universal bank

We commit to a culture that aligns risks and rewards; attracts and

develops talented individuals; fosters

teamwork and partnership; and is

sensitive to the society in which we operate

We serve shareholders best by putting our clients first and by building a global

network of balanced businesses

underpinned by strong capital and liquidity

We value our German roots and remain

dedicated to our global presence



To deliver our vision, we will utilize five key levers…

9

1 Focused portfolio of clients and regions based on our ability to generate value

Culture that sustainably rewards performance in line with societal values

Businesses built on the best people, best processes and consistent improvements

Strong capital base and rigorous risk-adjusted capital allocation

Disciplined cost management and consistent productivity gains

2

3

4

5

…which we will deliver across our regions, business pillars, and infrastructure

Clients

Culture

Competencies

Capital

Costs



Agenda

10

Vision



2

4

Cultural change5


Summary6



We will deliver our strategy through a clearly defined business model

11

Deutsche Bank

Non-Core Operations

Regional Management

Infrastructure

Private & Business Clients

Asset & Wealth

Management

Global Transaction

Banking

Corporate Banking & Securities


12

Invest

Maintain / re-tool

Turnaround

Exit

...add value for clients?

...align well to trends /

outlook?

...meet performance

criteria?

...contribute to balance?

ILLUSTRATIVE

Operating portfolio implications: Does the business...

We will allocate assets dynamically across our portfolio

12


13

Regions: We plan to grow our geographic footprint in Germany, the Americas and Asia Pacific

Germany— Build on existing strong platform as bank of choice— Increase loan volume by at least EUR 10 bn by 2015

Americas

— Position franchise to benefit from pro-cyclical recovery

— Capture market share, especially in Equities, Corporate Finance, core Latin America markets

Asia Pacific— Investment in CB&S flow franchise, GTB local large

cap clients and PWM in core markets— Deepen focus on India, China, Korea and ASEAN

Note: Excluding Corporate Investments and Consolidation & Adjustments (C&A)(1) Compound annual growth rate

EMEA ex Germany

— Streamline resource consumption in line with growth prospects

— Commit to the leading corporates and institutions

>20% 10-20% 0%

Indicative IBIT CAGR(1) aspiration 2011-2015


Where we are today

Where we aspire tobe in 2015

How will weget there

— Challenging environment (continued low interest rates and investment activity)— Undisputed leadership in German retail banking— Profitable and resilient international franchise despite crisis— Smooth execution of integration without impacting ongoing business

— Amongst the leaders in Europe— Strong advisory business in Germany and international sweet spots— Focused consumer banking business under Postbank brand— Integrated platform and end-to-end process model

— Implement Phase 2 and 3 of our integration roadmap— Implement our European target operating model and sustain focused growth— Leverage relative strength to grow credit business at attractive margins— Maintain strong position as deposit gatherer

14

Businesses: Private & Business ClientsBuilding a powerhouse while improving efficiency


15

Financial impactStrategic priorities

Focus on integrating Postbank

Increased efficiency in

advisory

De-risk / enhance asset efficiency

IBIT aspiration for PBC operating business(1), in EUR bn

2015

2011

IBIT

impa

ct

~3.0

2.0

Private & Business ClientsHow we will get there

~1.0

Key levers— Integrate Postbank / PBC Germany

— product standardization— straight through processing— front-end platform integration

— Improve cost efficiency in domestic banking

— Implement target operating model in international banking

— Continued disposal of Postbank non customer businesses

— Align resources to operating businesses

Status quo— Undisputed leadership in German retail

banking— Strong liquidity provides funding for

Group

Cumulative impact— CIR: ~60%— IBIT aspiration of ~EUR 3.0 bn

(1) All numbers exclude Non-Core Operations, 2011 numbers will therefore not reconcile to reported numbers



Corporate Banking & SecuritiesClear client demand for investment banking

16

Clients value investment bank proposition What do we do for clients“Linde has always valued the combination of investment banking, lending and commercial banking expertise from Deutsche Bank, so we are a firm believer in the universal banking model, including well-regulated derivative products.”– Prof. Dr. Reitzle, CEO Linde AG

“Choosing a bank to work with is all about available services and coverage -universal banks are best placed to help us with all our needs and we see investment banking services as particularly important.” – Henry R. Kravis, KKR

“Strong corporates need strong and stable banks with good investment banking products to help navigate the environment.” – Hans Dieter Pötsch, CFO VW AG & Porsche SE

— Transforming savings into capital

— Helping companies focus on core operations by managing commodities, rates risks

— Helping firms manage pension deficits

— Helping governments raise and manage debt

— Providing foreign exchange services for all types of clients

— Supporting world trade

— Connecting developed and developing markets

— Providing advice

— Providing market access

— Helping corporates access financing


Where we are today



— Challenging market conditions – outlook remains uncertain — Subdued revenue pools with ongoing regulatory pressure— Leading franchise today and well-placed to consolidate success in new

environment

— Top 3 global investment bank— Low cost flow platform; cost income ratio of <65%— Post-tax RoE of ~15%, ex transfers to Non-Core Operations and AWM, Basel 3

(fully loaded)

— Fully committed to cultural change— EUR 1.9 bn cost savings by 2015— Consolidate European leadership and capture share in US— Focus, scale and efficiency driving sustainable, attractive returns

17

Corporate Banking & SecuritiesRetaining our leading position while recalibrating


18

Corporate Banking & SecuritiesHow we will get there

Strategic priorities Financial impact (principal efficiency measures)

Cost savings aspiration for operating business, in EUR bn

Tota

lC

ost i

mpa

ct

1.9

0.4

0.8

0.2

0.5

Focus, scale and efficiency driving

sustainable returns

EUR 1.9 bncost savings

aspiration by 2015

Be at the forefront of cultural change

2012 savings (implemented)— Announced 900 front office headcount reduction; focus on

Equities/Corporate Finance in EU/APAC— Improved cost management

2013 / 14: Cost initiatives— Reduction of non-compensation costs— Platform realignment to emerging regulatory changes and

business performance

2014 / 15: Long term platform optimization— Lower compensation costs— Dynamic management of business portfolio

Infrastructure savings— Announced 600 infrastructure headcount

reduction— Front-to-back process optimization— Optimization of location footprint

Cumulative impact— CIR: <65%— Build upon top-3 positions(1)

(1) Top 3 rankings counted for each product and major region (Americas, Europe, Asia ex Japan, Japan). Products include a wide range of fixed income, equities and corporate finance products. Rankings generally on the basis of client market share, penetration or fees. Total of 77 markets analyzed


Where we are today



— Challenging market environment and consequences of strategic review— Three business units now combined creating global AWM scale player— Businesses previously under strategic review (DWS Americas, DB Advisors,

Deutsche Insurance Asset Management, RREEF) are an integral part of AWM

— ~EUR 1.0 trillion assets under management (AuM) / invested assets (IA)— Streamlined, efficient and integrated platform:

— ~EUR 0.7 bn cost savings— IBIT aspiration of ~EUR 1.7 bn

— Launched integration project (“Fusion”) to deliver— Client-centric solutions— Cost efficiency

— Transfer Passive and 3rd Party Alternatives out of CB&S into AWM— Unlock synergies across AWM and other businesses

19

Note: Financials include CB&S Passive and 3rd Party Alternative Businesses and infrastructure allocation costs

Asset & Wealth ManagementWe aspire to double profitability through integration and efficiency


20

Strategic priorities Financial impactIBIT aspiration for operating business(1), in EUR bn

Realize potential of underperforming businesses

Unlock revenue synergies by closer alignment to other DB businesses

Exploit megatrends: Clear investments in key customer segments, geographies

and asset classes

Drive efficiency gains from untapped synergies between AWM and passive businesses transferred from

CB&S

2015

2011

IBIT

impa

ct

Asset & Wealth ManagementHow we will get there

~0.3

~(0.1)

~0.8

~0.7

Key revenue levers— Focus on growth in UHNWI and EM

clients— Passive / alternative segments in focus— Leverage scale in active asset

managementKey cost levers— Eliminate duplication by integrating

3 previously separate businesses— Reorganize products and services

around distribution channels

Three solid pillars— Private Wealth Management— Retail & institutional Asset Management— Passive and 3rd party Alternatives

transferred from CB&S

Cumulative impact— ~EUR 1.0 trillion AuM/IA aspiration— Increase gross revenue margin

by ~5%

2012 cost base headwinds— Increase in cost base vs. 2011 primarily

driven by one-offs and FX effects

(1) All numbers exclude Non-Core Operations and include financial impact of passive asset management business transferred from CB&S, 2011 numbers will therefore not reconcile to reported numbers

~1.7


21

Where we are today



— Environment with notable headwinds, but also significant growth opportunities— Track record of consistent high performance— Prepared to continue GTB’s profitable growth trajectory and gain market share

— Strengthened competitive positions in all strategic client segments, product areas and markets

— Solidified position as a critical pillar of Deutsche Bank— IBIT aspiration of ~EUR 2.4 bn in 2015

— Deepen relationships with existing and acquire new target clients— Invest in solutions, platforms and operational excellence— Continuously optimize business portfolio, resource utilization and global footprint— Drive synergies from closer collaboration with CB&S, AWM and PBC— Maintain strict cost, risk and capital discipline

Global Transaction BankingWe aspire to double profitability by investing in growth


22

Global Transaction BankingHow we will get there

Financial impactStrategic priorities

Deepen relationships with clients, acquire

new clients

Invest in solutions, platforms and

operational excellence

Optimize business portfolio, resource

utilization and global footprint

Maintain strict cost, risk and capital

discipline

Closer collaboration with other businesses

IBIT aspiration for GTB operating business(1), in EUR bn

(1) GTB operating business is equal to reported segment as no planned transfer of assets from GTB to the Non-Core Operations unit (2) Reported numbers adjusted for deduction of estimated EUR 0.2 bn coverage cost allocation tin 2006, 2009, 2011 to be reflected in new business reporting structure

Commercial banking Netherlands turnaround— Increase cost and RWA efficiency— Optimize pricing levels and product offering

Grow Trust & Security Services / CashManagement Financial Institutions— Strengthen EUR and USD clearing positions — Expand corp. trust and sec. services offerings— Expand into under-penetrated client segments— Selective growth in Asia and Latin America

Grow Trade Finance & Cash Management Corporates— Targeted focus on multi-national companies— Global subsidiary business— Roll-out of financial supply chain products— Pre-export finance and export agency lending

Benefit from overall group efficiency measures

IBIT

impa

ct

2015 ~2.4

0.2

0.1

0.5

0.6

2006 0.5(2)

2011 1.0(2)

2009 0.8(2)


Transaction banking in Asia

— Trade facilitation— Access to

worldwide markets

How we are helping our clients and driving growthComplex client needs

Financial innovation in Europe

— Risk solutions— Trusted advice

Retail banking in Germany

— Wealth preservation and growth

Corporate finance in the US

— Access to liquidity and worldwide markets

— Helping multi-national clients with supply chain and trade finance products in India, driving a >40% yoy revenue increase

— Helping BMW manage their GBP 3 bn UK pension scheme for 60,000 pensioners

— Strong pipeline of future demand, DB seen as a market leader

— Better products resulting in >100% increase in retail deposits since 2006

— Over 640,000 new mortgages since 2006

— Helping financial institutions access international equity markets e.g., capital raising for AIG, Fifth Third to replace government funding

23

While recalibrating, we still see significant areas of growth and will invest in them


Where we are today



— Behind best-in-class operating efficiency— Silo structure leading to duplication in front and back offices— Excessive complexity— Unused potential of high-quality technology backbone

— Competitive cost structure— Improved organizational effectiveness and increased teamwork— Efficiency gains through standardization and automation

— Quality: improve services to clients and businesses— Flexibility: increase responsiveness by reducing fixed cost base— Control: invest further in robust environment— Cost: achieve world-class operating efficiency

24

InfrastructureKey to achieving operational excellence



Agenda

25

Vision



2

4

Cultural change5


Summary6


26

Core Tier 1 goalsBasel 3 Core Tier 1 ratio, fully loaded

1Q 2015

>10%

31 Mar 2013

8%

1 Jan 2013

7.2%

June 2012

10.2%(1)

(1) Based on Basel 2.5

We will realize our capital goals organically…

Capital tool box

Retained earnings

Bonus retention

Other capital tool box measures

Accelerated deleveraging of non-core risk-weighted assets


financial transparency. 27

…and will accelerate deleveraging by establishing a Non-Core Operations unit

Scope

RWA equivalent(1), 30 Jun 2012,

in EUR bn

CB&S

— Trading: securitization portfolio— Assets in run-off: CB&S monoline, legally and

regulatory challenged investments— IAS 39 assets

~100

Total ~135

PBC— Trading: Postbank structured credit portfolio— Assets and liabilities in run-off: non-core

portfolios

AWM — Assets in run-off: Sal. Oppenheim workout credit portfolio

CI— Trading: BHF bond portfolio— Operating assets: Actavis, Cosmopolitan, Maher,

BHF, real estate assets, industrial holdings

~20

~13

~3

Clear criteria used for identifying assets/liabilities in scope

(1) Pro-forma Basel 3 (fully loaded), RWAs include equivalent capital deduction items

Features

— Centralized coordination with Management Board-level accountability

— Separate disclosure from 4Q 2012 onwards

— Compensation aligned to deleveraging

— Reduction of ~EUR 45 bnby 1Q 2013


28

Achieving operational excellence -We aim to save EUR 4.5 bn annually…

EUR 2.8 bn16% of businesses baseline cost base

EUR 1.7 bn23% of Infrastructure baseline cost base

TotalEUR 4.5 bn(5)

1.1

0.2

0.4

1.1(2)

AWM

CB&S

GTB

PBC

Total Business

Other COO(3)

& Corporate Centre(4)

Global BusinessServices

Global Technology

Total Infrastructure

0.7

0.4

0.6

0.2 0.3 0.40.8CB&S PBCGTB AWM

1.72.8

Note: Numbers may not add up due to rounding(1) Cost savings based on 1H2012 annualized cost base; cost savings targeted without including cost changes that relate to litigation, investments (CtA), severance

unrelated to new cost program; regulatory spend assumed constant(2) Thereof running Powerhouse (Postbank integration) initiatives: run rate 2015 savings of ~EUR 0.5 bn(3) Other COO includes Logistics, Corporate Security, and central coordination functions(4) Corporate Center includes Risk, Finance, Legal & Compliance (L/C), HR, Co-Chairmen, Regional Management(5) Thereof Corporate Investments, Other: run rate 2015 savings of ~EUR 0.1 bn

Business savings aspiration2015 yearly run-rate savings(1), in EUR bn

Infrastructure savings aspiration2015 yearly run-rate savings(1), in EUR bn


financial transparency. 29

Achieving operational excellence –…by investing ~EUR 4 bn once

DB aspires to reduce its cost income ratio to <65% by 2015(1) Thereof: Corporate Investments, Other: run rate 2015 savings of ~EUR 0.1 bn; outstanding Powerhouse savings of ~EUR 0.5 bn mainly in IT(2) Thereof running Powerhouse (Postbank integration) initiatives: investments (CtA) of ~EUR 0.8 bn(3) Cost savings based on 1H2012 annualized cost base; cost savings targeted without including cost changes that relate to litigation, investments (CtA), severance

unrelated to new cost program; regulatory spend assumed constant

Our aspiration 2015In EUR bn

4.5

Structural leversSavings aspiration(3)

Sourcing excellence

Organizational streamlining

Front-to-back productivity

0.6

1.9

0.9

Footprint rationalization 0.3

—40 targeted sites for disposal—Max 40% share of infra staff

in prime locations

—Reduce from 10 to 8 layers —Increase average span of

control from 1:5.5 to 1:8

—Reduce vendor base by 25%—80%+ of spend with 500

vendors

—Increase level of automation to reduce cost per trade by ~20%

IT platform renewal 0.8—Magellan platform—Golden source for data

reference

Examples

Postbank CtAalready announced

Yearly run-rate

savings(1)

Incr. one-off

investment (CTA)(2)

Infra-structure 1.7

4.5

~4.0

Frontoffice 2.8

0.8

3.2


30

Our financial aspiration

(1) Based on FY2012 expected revenues at Group level with differences between divisions(2) Net savings excluding impact of litigation and CtA. CtA also includes severances unrelated to new cost programme(3) Based on corporate tax rate guidance of 30-35%, Basel 3 fully loaded and average active equity (4) Basel 3 fully loaded

Aspiration 2015

Growth in line with marketGroup revenues(1)

EUR 4.5 bn savings Expenses(2)

<65%Cost-income ratio

>12%Post-tax RoE(3)

>10%Core Tier 1 ratio(4)



Agenda

31

Vision



2

4

Cultural change5


Summary6


We acknowledge the need for cultural change

32

Performance culture

Cultural diversity

Entre-preneurialspirit

Teamwork and partnership

Long-term orientation and sustainability

Client focus

— Meritocracy— Execution and results

oriented— Crisis mobilization— Risk culture

— Speed and agility— Empowerment of business

leaders— Innovation

— Global culture— Strongly anchored in home

market— Respect for others— Ability to adapt and change

We are proud of the culture we have built Attributes we will emphasize

32


We will be at the forefront of our industry’s cultural change

33

Our key actionsOur commitments

Realigning compensation

Linking our values to behavior

We will lead the industry on realigning compensation balance and practices

We will make our cultural values central to the way we manage our people

— Increase time horizon for bonus payouts to senior management

— Extend equity vesting period from 3 to 5 years— Remove interim payment on deferred bonuses;

implement ‘cliff vesting’— Reduce bonus payouts in relation to business performance— Create external independent review panel to examine

compensation practices— Adopt industry-leading standards on transparent disclosure

of deferred compensation

— Tighten sanctions for behavioral breaches— Increase weighting of personal behavior assessment in

promotion and pay decisions— Launch critical review of our business practices— Implement broad participative cultural change program led

by Co-Chairmen and GEC



We have already addressed many compensation issues

34

Early adoption of regulatory requirements

Better alignment to long-term performance

Strong behavioral focus

Stricter governance

Increased transparency

(1) Variable remuneration awarded including deferrals. No adjustments made for pay mix change in 2010 (EUR 742 m). Ratios excluding Postbank: 2010 14%, 2011 12%

Compensation practices have improved

Bonus(1) as % of net revenues has declined

11

15

1719

2022

2006 2007 2008 2009 20112010



We will be a pioneer in creating an external independent review panel to examine our compensation practices

35

Panel composition… ...and objectives

— Benchmark our compensation systems against industry best practice and regulatory requirements and intent

— Formulate core principles and minimum standards for future compensation structures and practices

— Help define the appropriate level of transparency and disclosure

— Independent external panel of senior and highly credible professionals from outside the financial services industry

— Industry leaders from Germany, UK, US and Asia Pacific

— Leading academic in the field— External compensation consultant

The panel's findings will influence 2012 year-end compensation



Agenda

36

Vision



2

4

Cultural change5


Summary6


Our strategy in summary

37

Position Deutsche Bank as a winner in a changed environment

Strengthen our unique global platform and home market position

Further leverage integrated performance of our universal banking model

Achieve operational excellence

Build capital strength organically

Place Deutsche Bank at the forefront of cultural change in banking

1

2

3

4

5

financial transparency. Jürgen Fitschen, Anshu Jain Investor Day, Frankfurt, 11 September, 2012

Deutsche BankInvestor Relations

Press conference, Frankfurt, 11 September 2012

Deutsche Bank

Deutsche Bank:Winning in a changed environment Jürgen Fitschen and Anshu Jain,Co-Chairmen of the Management Board and the Group Executive Committee



This presentation contains forward-looking statements. Forward-looking statements are statements that are nothistorical facts; they include statements about our beliefs and expectations and the assumptions underlying them.These statements are based on plans, estimates and projections as they are currently available to themanagement of Deutsche Bank. Forward-looking statements therefore speak only as of the date they are made,and we undertake no obligation to update publicly any of them in light of new information or future events.

By their very nature, forward-looking statements involve risks and uncertainties. A number of important factorscould therefore cause actual results to differ materially from those contained in any forward-looking statement.Such factors include the conditions in the financial markets in Germany, in Europe, in the United States andelsewhere from which we derive a substantial portion of our revenues and in which we hold a substantial portion ofour assets, the development of asset prices and market volatility, potential defaults of borrowers or tradingcounterparties, the implementation of our strategic initiatives, the reliability of our risk management policies,procedures and methods, and other risks referenced in our filings with the U.S. Securities and ExchangeCommission. Such factors are described in detail in our SEC Form20-F of 20 March 2012 under the heading “Risk Factors.” Copies of this document are readily available uponrequest or can be downloaded from www.db.com/ir.

This presentation also contains non-IFRS financial measures. For a reconciliation to directly comparable figuresreported under IFRS, to the extent such reconciliation is not provided in this presentation, refer to the 2Q2012Financial Data Supplement, which is accompanying this presentation and available at www.db.com/ir.

Cautionary statements

39

39

deutsche bank: winning in a changed environment · 2015-08-31 · deutsche bank jürgen fitschen,...

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