Can Deutsche Bank Deliver on its Turnaround Plan?
Case Code: BSTR660
Case Length: 23 Pages
Pub Date: 2023
Teaching Note: Available
Organization : Deutsche Bank AG
Industry : Banking
Countries : Global
Themes: Turnaround Strategy, Restructuring, Banks and BankingLeadership and Change Management
Abstract Case Intro 1 Case Intro 2 Excerpts
The case discusses the crisis faced by global banking major Deutsche Bank and its attempts to recover from years of scandal and mismanagement. Since the 2008 global financial crisis, the bank had been caught in a downward spiral of declining revenues, money laundering scandals, steady departure of executives, lowered credit ratings, and rising costs. The case looks at the various reasons that led to the collapse of what had once been the largest lender in the world by assets and the efforts by successive CEOs to revive it. In 2018, Christian Sewing (Sewing) was appointed as the CEO to turn around the ailing bank after a series of failed turnaround plans and years of losses. In July 2019, he announced a comprehensive restructuring plan called ‘Compete to Win’ to transform Deutsche Bank. As part of the plan, he planned to close its global equities sales and trading operations, scale back its investment banking division, and cut costs to improve profitability and returns to shareholders.
Unfortunately, the outbreak of COVID-19 derailed Deutsche Bank’s recovery plans and disrupted its restructuring targets. Deutsche Bank’s shares slipped by as much as 17% in the first week of March 2020, in one its biggest drops in decades as the epidemic raged in Europe. But, despite the challenging times, Deutsche Bank posted a net profit of €624 million in 2020 driven by strong gains at its investment banking division, compared to a loss of €5.7 billion in 2019. Going forward, the challenges before Sewing were to boost growth in other areas of the bank, achieve revenue targets, sustain profits amid market volatility linked to the pandemic, and restore investor and regulatory confidence in the bank.
The case is structured to achieve the following teaching objectives:
- Understand the reasons behind the downfall of one of the biggest banks in the world.
- Understand the elements of a successful turnaround.
- Evaluate the strategies adopted by Sewing in turning around Deutsche Bank.
- Analyze the pros and cons of Deutsche Bank’s restructuring plan.
- Explore additional measures Sewing should take to boost Deutsche Bank’s revenues and regain investor confidence .
A Decade of Woes (2008-2018)
‘Compete To Win’ Strategy
Covid 19 Strikes
The Road To Recovery
Turnaround; Restructuring; Strategic Management; Corporate Globalization; Competitive Forces in Banking; Leadership and Change Management; COVID-19; Globalization; Crisis Management
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