The bank will sell its private and commercial banking business in Portugal to ABANCA Corporación Bancaria S.A in a deal that is expected to be concluded in the first half of 2019 in efforts to save costs and make its business more lean. However, its Corporate & Investment Banking unit will still deliver services to its customers in Portugal. The financial terms of the deal have not been disclosed.
The move to divest part of its business comes after the bank, in 2015, sold its retail business alongside reducing investment and pulling out of seven of the 70 countries in which it operates. Over the past year, shares in the bank have fallen 21% on the NYSE against 8.9% industry growth, with investor confidence declining. The bank reported a net loss of EUR 497 million in 2017.
Besides the sale of parts of its business to ABANCA, Deutsche Bank is also seeking to find a new CEO to replace John Cryan to get the bank back into the black. Additionally, there is tension between the board and Cryan, as he wants to significantly revamp the bank’s investment banking division, which is marred by underperformance. What further adds to the discontent with Cryan is the tense relationship between him and the bank’s chairman, Paul Achleitner.
Another issue that continues to plague the bank are legal issues, which blemish the bank’s reputation.
ABANCA sees the deal as a means for expansion in Portugal and as a catalyst for growth for its strategic segments. The bank is headquartered in Spain and serves Portuguese SMEs.
By Elliot Lyons, Research Analyst