Deutsche Bank officials are considering the expansion of the portfolio the lender is offloading onto a “bad bank,” created in July 2019 to help the lender recover. The asset sale is motivated by a search for liquidity, Reuters reports.
The German lender is divesting from investment banking to transaction banking and private asset management. The lender is planning to offload €74bn in assets, primarily long-dated derivatives and distress bonds, while the bank will hold on to its better-performing bond-trading business.
Deutsche has plans to add additional assets into the bad bank to gain access to more capital. Shedding long-term yielding so-called “Tier-3” assets can be a delicate operation but the lender is shedding even profitable assets to finance its restructuring operation.
Deutsche’s fire sale is accompanied by a plan to shed 18,000 jobs, trying to restructure the bank on a €7,4bn budget. Despite raising €29.3bn over the last nine years, the German lender has been unable to return to profitability. Over the last 9 years, the Deutsche Bank has lost 75% of its value.
Over the first quarter, Deutsche generated a 1,3% profit and. In May, the lender’s value dipped below the €6 per share benchmark, that is, its lowest in 149 years.