Deustsche Bank 2Q15 Earnings Call Notes

New CEO and CFO

“I have the pleasure to be joined by our new Co-CEO, John Cryan, and our new CFO, Marcus Schenck.”

We have a structural cost problem

“We have a structural cost problem. That’s obvious to all of you who’ve followed the Bank for some time. We will not succeed on our own terms until we simplify our overly complex operating model. It stifles efficiency and it frustrates and delays decision-making. I believe we understand the principal root causes of our inefficiency. We must overhaul our antiquated, fragmented and incomplete technology platform. We have to wean ourselves off an over-reliance on manual processes, and we have to rectify our poor record of managing significant infrastructure investments.”

We have too large and complex a balance sheet

“We also have too large and complex a balance sheet, currently earning returns that do not fund our levies or generate an acceptable risk-adjusted return on leverage-based capital. This is particularly true for long-dated contracts. Although we’ve made some progress, we need to tackle the balance sheet more proactively and more aggressively.”

Don’t need to raise capital

“In this context, let me address specifically the issue of capital adequacy. I am aware that there has been some speculation that we might be considering raising additional capital. It’s my firm opinion that raising additional capital would not solve our core problem of reversing our low financial returns and our poor organic capital generation.”

This is all obvious stuff, but it will take a long time to deliver

All that I’ve just described to you is obvious. Addressing these challenges, however, will not be easy and will take years to deliver, but I’m determined that we will get this done. I fully understand this is no longer about words but deeds”

Why the new CEO came here

“Let me at least take the first one, given that it was addressed to me. I think you know that I’ve been on the Supervisory Board at the Bank for a couple of years, and I was in the position of Chairing the Audit Committee and I sat on the Risk Committee. So the transition into the management team was reasonably logical when an opening came up. And I do feel that although as a non-executive director you get an exposure to the Bank and sitting on the Audit Committee you never get much good news, it was nevertheless fairly logical and seamless in the transition from Supervisory Board to the management.

Why the Supervisory Board? Well after I’d left UBS I spent some time, not literally, on the beach and thought that I’d gained some experience that might be helpful elsewhere, and the opportunity at Deutsche Bank came up and I took it. So there was nothing untoward, and it all was very seamless and took place over two or three years. On the other points, Marcus, do you want to take the one on leverage?”