FRANKFURT Deutsche Bank's (DBKGn.DE) new leaders will lay out plans to bolster its capital position and cut costs on Tuesday, as they battle to persuade investors that Germany's biggest lender can grow profit in the midst of a downturn in investment banking.
After 100 days in office, co-chief executives Anshu Jain and Juergen Fitschen will elaborate on which areas are to be hit by job cuts, how the bank's asset management business will be overhauled, how bonus policies will change, and whether to expect a capital increase.
Banks across Europe are taking an axe to costs and shedding assets to cope with a downturn in dealmaking in a faltering global economy and tougher regulations aimed at preventing a repeat of the 2007-8 financial markets crisis.
Having abandoned its target for a pretax return on equity (RoE) of at least 25 percent, Deutsche has yet to explain what kind of profits it sees for itself. In the second quarter, Deutsche's pretax return on equity was 6.8 percent.
The bank has already admitted its cost base is too high and announced 3 billion euros worth of cost savings, including 1,900 job cuts. But it hasn't yet given any guidance about potential restructuring charges, or how this impacts revenues.
"Key focus at (the) investor day will be capital and earnings power," analysts at Morgan Stanley said.
The group's capital position appears stretched relative to peers, with some analysts identifying a capital shortfall of $6.2 billion. But few expect Deutsche to unveil a capital hike.
Instead, the bank is tipped to detail ways of shrinking its balance sheet, since fewer risky assets means having to set aside less capital under Basel banking rules.
This means slashing another 43 billion euros worth of risky assets from Deutsche's balance sheet, analysts at Espirito Santo Investment Bank Research said.
The bank may also give guidance on possible litigation charges. Deutsche has said it has received various subpoenas and requests for information related to possible manipulation of the Libor benchmark international lending rates.
($1 = 0.7812 euros)
(Reporting by Edward Taylor; Editing by Mark Potter)