You got a plan B?
Deutsche Bank’s in a tough spot: It’s not making as much as it (or its shareholders) would like. This led to some very serious soul-searching on the Taunusanlage as one of the world’s largest and most important banks tried to figure out what it wanted to be. And what it wants to be is Goldman Sachs. What it definitely does not want to be anymore is a retail bank, because retail banking is tiresome and requires dealing with unions, and unions have the annoying habit of occasionally going out on strike when you won’t promise not to fire anyone.
Unfortunately, there’s an ironclad clause in Deutsche Bank’s charter that says it can fail only one stress test per year. So when the other powers that be in Germany decided that going all-in on investment banking would not pass stressful muster, Jürgen and Anshu had to go back to the drawing board. Plus, there can’t really be two chosen banks, can there?
Stripped of its retail arm's rich seam of deposits, the proposal - codenamed Model 5 during the process - failed because its funding dried up and its cost of capital rose in the stressed scenario, the sources familiar with the process said.
The result was that Model 5, which was already opposed by a trade union fearing mass layoffs and politicians who instinctively disliked the idea of Germany's flagship bank abandoning its retail customers, was no longer viable….
This left Deutsche Bank with no option but to present a less radical plan, coded Model 2, to its investors on Monday after getting supervisory board approval for it on Friday. Postbank will be sold via a stock market listing and Deutsche will cut around 150 billion euros in investment bank assets.