As Deutsche Bank Takeover Speculation Intensifies, Here's A Look At The Troubled Bank's Options

Since taking over troubled German lender Deutsche Bank back in April, Christian Sewing has watched the recidivist lender's troubles go from bad to worse.

On Friday, the bank's shares reached an all-time low; they're now down 50% YTD, making Deutsche the worst performer in a poorly performing index of the world's largest global banks. The latest selloff was inspired by the Frankfurt prosecutor's office deciding to raid six Deutsche buildings, including the bank's headquarters The raid, which continued for two days, doubled as the first public revelation about the latest criminal scandal involving Europe's biggest bank by assets, which has already paid $18 billion in legal penalties since the financial crisis. Prosecutors revealed that they were investigating at least two employees in the bank's wealth management unit (part of the division overseen by Sewing before he took the CEO job) for allegedly helping customers set up accounts in offshore tax shelters and helping criminals launder their ill-gotten gains - allegations that prosecutors said were inspired by the infamous 'Panama Papers' leak. During their raid, prosecutors searched the offices of five senior Deutsche executives, including the bank's chief compliance officer, who was rumored to be leaving the bank in a report published just days before nearly 200 police officers, tax inspectors and prosecutors showed up outside Deutsche's international headquarters and demanded that everybody step away from their computers.


Given the abysmal week the bank just had, it's hardly surprising that the financial media has published a barrage of negative stories featuring anonymously sourced quotes from Deutsche "investors" effectively demanding that, if Sewing can't get his shit together in the next quarter or two, he will need to abandon the "strategic alternatives" (cost-cutting, shifting the bank's investment strategy to emphasize growth in wealth management) that he championed as a road toward salvation (alongside cost-cutting, of course) and seriously consider a sale.

Here's Bloomberg:

While many of Deutsche Bank’s largest investors, contacted before the raids, said they still back him, they argued he only has another quarter or two to prove his approach can work. At the same time, strategic alternatives are getting ever more painful for shareholders because of the low stock price.

The bank just finished slashing 10,000 jobs across its global operations. But after posting a Q3 decline in net income that was the largest in eight years, many investors (possibly even the activist investor who disclosed a 3% stake in the bank back in November, arguing that he was going "all in" on Sewing) will push for another wave of layoffs. And even cutting its global workforce to the bone may not be enough to bring the bank back toward profitability (particularly if it is slapped with another mutli-billion dollar fine).

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