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Europe's Largest Bank Just Scrapped Its Dividend

Make no mistake, the writing has been on the wall for months. 

Deutsche Bank is going through a painful restructuring that began with the ouster of co-CEOs Anshu Jain and Jürgen Fitschen and culminated in new CEO John Cryan’s move to eliminate a quarter of the workforce, or some 23,000 people. 

The bank then proceeded to announce a shakeup in the corporate structure before moving to cut the I-bank bonus pool by some $566 million. 

Well don’t look now, but just moments ago, Europe’s biggest bank eliminated the dividend. 

  • DEUTSCHE BANK TO ELIMINATE 2015, 2016 DIVIDENDS TO MEET TARGETS

Here's the press release:

From DB

The Management Board of Deutsche Bank today approved the implementation of the Bank's strategic plan, known as “Strategy 2020”. The plan includes the following financial targets: 

 

  • CET 1 ratio: at least 12.5% from the end of 2018 
  • Leverage ratio: at least 4.5% at the end of 2018 and at least 5.0% at the end of 2020 
  • Return on Tangible Equity (RoTE): greater than 10% by 2018 
  • Adjusted Costs (total noninterest expenses excluding restructuring and severance, litigation, impairment of goodwill and intangibles and policyholder benefits and claims) of less than EUR 22.0 billion by 2018 
  • Cost/income ratio (CIR) of approximately 70% in 2018 and of approximately 65% in 2020 
  • Risk Weighted Assets (RWA) (excluding regulatory inflation following regulatory changes expected to be at least EUR 100 billion by 2019/2020) of approximately EUR 320 billion at the end of 2018 and of approximately EUR 310 billion at the end of 2020. 

 

Furthermore, the plan is based on the elimination of the Deutsche Bank common share dividend for the fiscal years 2015 and 2016. The Management Board expects to recommend the payment of common share dividends commencing from fiscal year 2017 at a competitive payout ratio.