Milan - Deutsche Bank AG employees in its Postbank unit voted in favour of striking indefinitely, escalating protests as they seek job protections amid a companywide strategic review that may lead to the division’s sale.
Members of the Verdi labor union voted 95 percent in favour of the measure, the group said Sunday in a statement. Thirty- three days of warning strikes already closed 670 branches for as many as four days apiece while sparing customers a nationwide shutdown, the union said. The next phrase will have a “more pronounced effect,” it said without elaborating.
Just five years after Deutsche Bank acquired consumer lender Deutsche Postbank AG to reduce its dependence on volatile earnings from investment banking, the company will probably opt to exit all or part of consumer operations in a strategy revamp to be announced as soon as this month, a person with knowledge of the situation said last week. The firm is still weighing a third option of keeping all the divisions while making deeper cuts across the businesses, though that is the management board’s least-favoured course, according to the person, who asked not to be identified because the talks are private.
Still debating
Alexander Adler, a spokesman for Postbank, declined to comment on Verdi’s statement. The lender has about 1,100 branches, according to its website.
Deutsche Bank shares rose as much as 1.7 percent to 31.21 euros as of 9:55 a.m. in Frankfurt trading Monday.
Co-Chief Executive Officers Anshu Jain and Juergen Fitschen, who took over three years ago, are leading a review to boost returns and capital levels. While some analysts said a sale of the entire consumer business -- that of Postbank and other retail activities at home and outside Germany -- to concentrate on investment banking would generate greater returns, others have said the move would deprive the bank of deposits it for funding.
The lender has been transparent that it’s reviewing and updating its strategy and that the company will communicate further in the second quarter after the decisions are made, Michael Golden, a spokesman at Deutsche Bank, said April 17.
Deutsche Bank’s management board is still debating models and the bank has met with regulators led by the European Central Bank since outlining the options to the supervisory board in March, according to the person. They have stress-tested them and analysed whether the securities unit would have a sufficient business mix to cushion swings in profits if it did split entirely from consumer activities, said the person.
Credit rating
An official at the ECB in Frankfurt declined to comment last week.
The securities unit, the largest among European banks, would retain global transaction banking and wealth management operations, which hold some deposits that are typically considered less stable than consumer deposits.
The consumer unit had the lowest return on equity and the highest costs as a share of revenue of any of the company’s four units last year, filings show. Under the plan, the bank’s Postbank unit and the other consumer operations would be bundled together and sold to the public in 2017, the person said.
A stand-alone consumer business would probably have a higher credit rating than Deutsche Bank’s current rating, according to the person.
Germany’s Der Spiegel and Frankfurter Allgemeine Zeitung reported on April 17 that the board reached a preliminary decision to sell just Postbank unit and that a proposal to split off the entire retail business didn’t win a majority backing.
A partial sale of retail banking activities, those of Postbank in Germany, is seen as generating lower returns for shareholders but also carrying less risk, said the person.
The ECB is open to both models, which would see some scaling back of the investment bank, and would communicate the capital buffers the units would likely need once the bank proceeds with the reorganisation, said the person.
Deutsche Bank’s management is weighing the options ahead of a supervisory board meeting scheduled for April 24, said the person. A final decision may not be reached by then as management debates the risk and reward of the two scenarios, according to the person.
Bloomberg