[ by Howard Haykin ] 

"Deutsche expects to focus more on Asia and the Americas for growth." 

On Tuesday, May 11, 2012, millions of Americans took time out of their busy schedules to shed tears of grief for, and to honor the civilian and uniformed heroes who were among the nearly 3,000 victims of this day's terroritist activities back in 2001.  All who died were innocent victims of a coordinated Islamist terrorist attack whose sole purpose was to destroy iconic structures in the United States, take many lives, and disrupt and cripple the country - both physically and emotionally - for some time to come. 

All 4 planes departed from Boston's Logan International Airport, and each was destined for a far off destination - which ensured full gas tanks in the planes.  Shortly into the flights, the terrorists commandeered the 4 aircraft, and prompty revised the flight course to either New York City or Washginton, D.C. 

As it turned out, the 2 New York planes were targeting for the South and North Towers at the World Trade Center.  The terrorists succeeded in piloting the planes to their targets, and then crashed head on into the respective building.  The reservoir of fuel in each plane managed to burn at extremely hot temperatures for hours, which crippled the fondations of the Tower buildings.  Eventually both imploded into a dusty rubble. 

Of the 2 planes destined for the nation's capital, only one reached its destination -  the Pentagon.  The plane plowed through several sections of the target creating damage and taking innocent lives.  The second plane never reached its destination - which was to be the White House.  While the plane was crossing Pennsylvania, a group of passengers charged and tried to overtake the terrorists.  The plane crashed in an unoccupied farm area, killing all on board, but we believe did not kill anyone who was on the ground.

Deutsche Bank Goes Prime Time. The bank's 2 new leaders, Anshu Jain and Jurgen Fitschen, laid out plans to steer Deutsche through what is expected to be a period of lower profits and regulatory change for global banks.  Each had previously promised:

• to cuts costs and jobs,
• to create a stronger balance sheet,  and,
• to curb senior bankers’ pay to steady Germany’s flagship bank.

The above plans will lead to the following actions:

1. Changing the Investment Banking Culture.   Deutsche expects to be at the forefront of a change in investment banking culture - taking their cue from the public anger outragedirected  at excessive risk-taking and large staff bonuses.
2. Getting Involved in Regulatory Inquiries.   Deutsche vowed to become more involved in regulatory probes, such as inquiries into interest rate manipulation. 
3. Shoring Up Capital Base.   Also responding to investor pressure, he Co-CEOs agreed to strengthen the bank’s capital base by promising deeper cuts to its balance sheet rather than raising more equity from shareholders.
4. Non-Core Operations.    The bank will create a “non-core operations” unit to get rid of €135 billion of risk-weighted assets
5. Increase Post-Tax Return.    The bank plans to generate a post-tax return on equity of at least 12% - broadly in line with peers but sharply down on the pre-tax return of 25% per cent endorsed by ex-CEO Josef Ackermann before the financial crisis.
6. Increase Spending to Reduce Operating Costs.   By strategically spending about €4bn over 3 years, Deutsche expects to lower its operating costs by €4.5bn annually.  These are more ambitious that formerly announced.
7. Deutsch wants to end its historical lack of balance in its earnings and the long-term underperformance of some businesses.

Compensation and Staffing.  

1. About 150 senior managers at the bank will get bonuses paid only after five years, removing rights to any interim payments in what the bank described as “cliff vesting” of the bonuses.
2. Deutsche will use an independent review panel from outside banking to scrutinize its pay system, though neither of the CEOs would go as far as to impose any absolute caps on pay.
3. Deutsche will not sell off many of its asset management businesses, and instead aims to double earnings from asset and wealth management over the next 3 years, relying mainly on cost cuts.
4. Deutsche wants to double profits over the same period from transaction banking and get a lesser boost from pre-tax profits from retail banking, including its Postbank arm, should rise from €2bn to €3bn.
5. Deutsche gave no profit target for its investment bank, where it €1.9bn of costs will be cut, and which previously announced that 1,500 jobs would be cut.
6. After the cuts, investment bank is not expected to generat about 2/3's of group profits,  as it usually does.  A more realistic # is 50%.but Deutsche has previously indicated that this could fall to about 50 per cent as other divisions grew.

For further details, go to:  [FT.com, 9/11/12].