FRANKFURT (Reuters) - Deutsche Bank’s top executives will this weekend consider speeding up cuts at Germany’s biggest lender, which is grappling with sliding revenue and negative interest rates, sources told Reuters on Thursday.
The gathering takes place amid speculation over the future of Deutsche Bank, once a powerful international player, after it held talks in August about a tie-up with smaller rival Commerzbank, but decided not to pursue the idea.
Both Deutsche and Commerzbank - the two biggest lenders in Europe’s biggest economy - have been slipping down the rankings of the continent’s top banks, hamstrung by a fragmented and competitive home market and rock-bottom interest rates.
At the heart of the talks among Deutsche’s top managers will be how it is implementing a group strategy presented last year, one of the sources said, while another said speeding up the sale of assets will also be in focus.
“They want to think about their structures and costs again,” one of the sources said. “The question is if what has been done so far is enough.”
Last year Deutsche Bank announced plans to slash 15,000 jobs and shed businesses employing some 20,000 staff.
The bank’s total assets were down to 1.8 trillion at the end of the quarter, from 2.2 trillion at the end of 2008, but up 6 percent year-on-year and analysts have often criticized the slow pace of asset cutbacks.
Deutsche Bank declined to comment on the meeting this weekend, which will pave the way for a gathering of the bank’s executive and supervisory boards in mid-September in Milan.
A possible adjustment of the bank’s strategy will also be addressed at this meeting, after Chief Executive John Cryan recently said deeper cuts may be needed.
While the official internal agenda is focused on internal processes, the sources said, strategic alternatives will likely be put on the table.
Earlier this week, a person familiar with the matter said that Deutsche and Commerzbank had held talks on a potential combination, but shelved the project as they want to complete their restructurings before any such move.
Cryan took the unusual step of publicly calling for cross-border bank mergers in Europe at a conference on Wednesday.
Reports of a possible tie-up with its Frankfurt neighbor left some investors bemused.
Helmut Hipper, a fund manager at Deutsche Bank shareholder Union Investment, questioned the logic of a tie-up with Commerzbank, given Deutsche’s plans to spin off a retail bank it owns, Postbank.
“The regulatory trend at the moment is moving in the direction of shrinking rather than growing banks,” he said.
Analysts have argued that Deutsche would be advised to find a partner once it has stabilized its business.
Editing by Maria Sheahan and Alexander Smith