Reorganizing: Deutsche Bank said it wanted to focus on corporate finance and global transaction processing, and this week we learned the restructuring will cut deeper than the statements of two weeks ago suggested. The bank will sell off all retail banking operations and make an additional 15,000 job cuts on top of that. It will shut down all operations in ten countries: Argentina, Chile, Denmark, Finland, Malta, Mexico, New Zealand, Norway, Peru, and Uruguay. Russia did not make this list, but the bank said previously it would drastically scale back its operations in that country. Aside from everything that is closing, the bank says it will trim its customer list by half in the core businesses that remain. Deutsche Bank plans to complete these changes within five years.
Raising capital: Standard Chartered Bank plans a $4 billion stock issue. General Electric is said to have at least three bidders for its French bank. Lloyds wants to sell £2 billion in new shares in the spring to replace the government’s remaining post-bailout ownership share, but plans might not be realistic. Most Wall Street banks will need to raise capital, an estimated $200 billion in total, to meet proposed rules covering margin requirements for credit default swaps not cleared through exchanges and capital requirements for systemically important banks.
Rescued: In one of the strangest buyouts in the post-recession era, First Niagara in 2010 bought out the holding company of Harleysville National Bank, which had spent itself into insolvency with ill-timed acquisitions in mortgage lending and weath management. It seemed a bit much for First Niagara to take on, but the deal was ultimately approved. Now it is First Niagara’s turn to be rescued. The acquiring bank this time is KeyBank. The deal values First Niagara at $11.40 per share or about 25 percent less than the stock was worth before the Harleysville National Bank acquisition. Ratings agency Moody’s has placed KeyCorp on review for downgrade because of the added credit risk the bank takes on from the deal.
