Retail Finance Halved... What Is Happening to Deutsche Bank?

Germany's largest bank, Deutsche Bank, is cutting the number of branches of its retail banking subsidiary by half. The plan is to focus on investment banking instead of retail banking, which has become a burden due to customer neglect and deteriorating performance.

On the 30th (local time), major foreign media outlets reported, citing sources, that Deutsche Bank plans to close up to 250 of the 550 branches of its retail banking subsidiary, Postbank. The branch consolidation will take place over the next two years.

Claudio De Santis, head of Deutsche Bank's retail banking, said, "We plan to significantly reduce the (retail banking) branch network over the next two years," adding, "The goal is to transform Postbank into a mobile-first bank in the medium to long term."

[Image source=Reuters Yonhap News]

Deutsche Bank's retail banking division, Germany's largest bank, has become an unwanted entity since 2010 due to customer neglect and cost issues. In an effort to diversify its business, it forcibly entered the retail banking sector and failed to respond timely to the spread of non-face-to-face transactions, which was a fatal mistake. With the expansion of mobile transactions reducing demand, Deutsche Bank's branch network has decreased by 43% over the past 10 years since 2013. During this period, Deutsche Bank closed more than 15,000 branches.

The origin of Germany's financial industry, Deutsche Bank was established in 1870 to finance foreign trade and railway network expansion. Initially focusing on bond issuance and investment banking, it grew dramatically through mergers and acquisitions of regional banks within Germany and entry into the retail banking sector. Once a global bank standing shoulder to shoulder with JP Morgan and others, it has repeatedly fallen since the 2008 global financial crisis due to mass layoffs and successive allegations and scandals of misconduct.

Deutsche Bank currently focuses on corporate finance (investment banking), private banking for wealthy individual clients, and its asset management subsidiary DWS, while its retail banking subsidiary is Postbank.

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