Deutsche Bank is grappling with sliding revenue and negative interest rates and therefore the bank’s top executives will this weekend consider speeding up cuts at Germany’s biggest lender, reported Reuters citing sources with close knowledge of the issue.

In August, Deutsche Bank held talks about a tie-up with smaller rival Commerzbank, but decided not to pursue the idea which has raised speculation over the future of Deutsche Bank, once a powerful international player. The gathering of the top officials therefore takes place amidst an environment of speculation.

Hamstrung by a fragmented and competitive home market and rock-bottom interest rates, both Deutsche and Commerzbank have been slipping down the rankings of the continent’s top banks. They are the two biggest lenders in Europe’s biggest economy.

One of the sources said that while speeding up the sale of assets will be in focus, how it is implementing a group strategy presented last year would also be taken up for discussion and these two issues would be at the heart of the talks among Deutsche’s top managers, the other source reportedly said.

“They want to think about their structures and costs again. The question is if what has been done so far is enough,” one of the sources said.

Last year Deutsche Bank shed businesses employing some 20,000 staff and announced plans to slash 15,000 jobs.

Aalysts have often criticized the slow pace of asset cutbacks and despite being up 6 percent year-on-year, 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.

The gathering this weekend will pave the way for a gathering of the bank’s executive and supervisory boards in mid-September in Milan and the Deutsche Bank declined to comment on the latest meeting.

After Chief Executive John Cryan recently said deeper cuts may be needed, a possible adjustment of the bank’s strategy will also be addressed at this meeting.

The sources said that strategic alternatives will likely be put on the table even as the official internal agenda is focused on internal processes.

Deutsche and Commerzbank had shelved the project of merger as they want to complete their restructurings before any such move after both the banks had held talks on a potential combination earlier this week, a person familiar with the matter said.

At a conference on Wednesday, a call for cross-border bank mergers in Europe was given by Cryan in what is being considered as an unusual step of a public calling.

Some investors bemused with reports of a possible tie-up with its Frankfurt neighbor.

Given Deutsche’s plans to spin off a retail bank it owns, Postbank, the logic of a tie-up with Commerzbank was questioned by Helmut Hipper, a fund manager at Deutsche Bank shareholder Union Investment.

“The regulatory trend at the moment is moving in the direction of shrinking rather than growing banks,” he said.

Once it has stabilized its business, Deutsche would be advised to find a partner, analysts have argued.

(Adapted from Reuters)

Categories: Economy & Finance