Deutsche Bank says big-bang restructuring on track

Deutsche Bank’s net profits reached €401 million on the back of €6.6 billion in revenue. (AFP)
Updated 25 July 2018
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Deutsche Bank says big-bang restructuring on track

  • Analysts surveyed by data company Factset had earlier forecast profits of around €120 million
  • It finished integrating of subsidiary Postbank into its retail banking division in May

FRANKFURT: Germany’s biggest lender Deutsche Bank said Wednesday a major restructuring under its new chief executive was in full swing, as it confirmed second-quarter profits that beat analysts’ previous expectations.
Net profits reached €401 million ($468 million) on the back of €6.6 billion in revenue, in line with preliminary figures the lender released earlier this month.
Analysts surveyed by data company Factset had earlier forecast profits of around €120 million.
But the result was still 14 percent lower than last year’s second-quarter earnings of €466 million.
“We accelerated the reshaping of our bank significantly and proved the resilience of our global business” between April and June, said CEO Christian Sewing, who took over from crisis firefighter John Cryan in April with promises of a far-reaching shakeup.
Deutsche highlighted some €239 million in costs for restructuring and employee severance — twice as much as the same quarter last year — as around 1,700 workers left.
It added that it was “on track” to slash another 1,500 from its total headcount to dip below 93,000 by the end of the year, with a further ambition to shrink “well below” 90,000 by the end of 2019.
Meanwhile it finished integrating of subsidiary Postbank into its retail banking division in May.
And in its investment banking division, Deutsche reported “substantial” reductions in “leveraged” — or borrowing-fueled — holdings of stocks and bonds, accounting for most of an €85-billion reduction in such exposures across the bank.
There was slower progress on cutting costs, which fell 1.0 percent to €5.6 billion in adjusted terms in the second quarter.
But executives said they remained committed to reducing outlays from last year’s €23.8 billion to €23 billion in 2018.


Foreign investors hope India dials back policy shocks after Modi win

Updated 24 May 2019
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Foreign investors hope India dials back policy shocks after Modi win

  • Modi’s pro-business image and India’s youthful population have lured foreign investors
  • After Modi’s win, about a dozen officials of foreign companies in India and their advisers said they hoped he would ease his stance and dilute some of the policies

NEW DELHI: Foreign companies in India have welcomed Prime Minister Narendra Modi’s election victory for the political stability it brings, but now they need to see him soften a protectionist stance adopted in the past year.
Modi’s pro-business image and India’s youthful population have lured foreign investors, with US firms such as Amazon.com , Walmart and Mastercard committing billions of dollars in investments and ramping up hiring.
India is also the biggest market by users for firms such as Facebook Inc, and its subsidiary, WhatsApp.
But from around 2017, critics say, the Hindu nationalist leader took a harder, protectionist line on sectors such as e-commerce and technology, crafting some policies that appeared to aim at whipping up patriotic fervor ahead of elections.

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“I hope he’s now back to wooing businesses,” said Prasanto Roy, a technology policy analyst based in New Delhi, who advises global tech firms.
“Global firms remain deeply concerned about the lack of policy stability or predictability, this has sent a worrying message to global investors.”
India stuck to its policies despite protests and aggressive lobbying by the United States government, US-India trade bodies and companies themselves.
Small hurdles
Modi was set to hold talks on Friday to form a new cabinet after election panel data showed his Bharatiya Janata Party had won 302 of the 542 seats at stake and was leading in one more, up from the 282 it won in 2014.
After Modi’s win, about a dozen officials of foreign companies in India and their advisers told Reuters they hoped he would ease his stance and dilute some of the policies.
Other investors hope the government will avoid sudden policy changes on investment and regulation that catch them off guard and prove very costly, urging instead industry-wide consultation that permits time to prepare.
Protectionism concerns “are small hurdles you have to go through,” however, said Prem Watsa, the chairman of Canadian diversified investment firm Fairfax Financial, which has investments of $5 billion in India.
“There will be more business-friendly policies and more private enterprise coming into India,” he told Reuters in an interview.
Tech, healthcare and beyond
Among the firms looking for more friendly steps are global payments companies that had benefited since 2016 from Modi’s push for electronic payments instead of cash.
Last year, however, firms such as Mastercard and Visa were asked to store more of their data in India, to allow “unfettered supervisory access,” a change that prompted WhatsApp to delay plans for a payments service.
Modi’s government has also drafted a law to clamp similar stringent data norms on the entire sector.
But abrupt changes to rules on foreign investment in e-commerce stoked alarm at firms such as Amazon, which saw India operations disrupted briefly in February, and Walmart, just months after it invested $16 billion in India’s Flipkart.
Policy changes also hurt foreign players in the $5-billion medical device industry, such as Abbott Laboratories, Boston Scientific and Johnson & Johnson, following 2017 price caps on products such as heart stents and knee implants.
Modi’s government said the move aimed to help poor patients and curb profiteering, but the US government and lobby groups said it harmed innovation, profits and investment plans.
“If foreign companies see their future in this country on a long-term basis...they will have to look at the interests of the people,” Ashwani MaHajjan, an official of a nationalist group that pushed for some of the measures, told Reuters.
That view was echoed this week by two policymakers who said government policies will focus on strengthening India’s own companies, while providing foreign players with adequate opportunities for growth.
Such comments worry foreign executives who fear Modi is not about to change his protectionist stance in a hurry, with one offical of a US tech firm saying, “I’d rather be more worried than be optimistic.”