Strategy

Restructuring Gaining Steam at European Banks

Credit Suisse, Standard Chartered and Deutsche Bank are among the banks that are overhauling themselves after losing ground to U.S. banks.
Katie Kuehner-HebertOctober 9, 2015

After lagging behind U.S. banks that restructured quickly after the global financial crisis, European banks are finally beginning to overhaul themselves amid concerns over profitability, according to The Wall Street Journal.

Credit Suisse, Standard Chartered and Deutsche Bank are among European banks that have been facing muted growth in their home markets and more stringent regulation and capital requirements, the WSJ said.

Other concerns are uncertainty over China’s growth, U.S. interest rates and the slide in global commodities prices.

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U.S banks restructured fairly quickly following the crisis and are now in growth mode, winning business away from European rivals. Analysts told the WSJ that European banks “need to rethink quickly or risk losing more ground.”

There are signs, though, that restructuring is gaining momentum in Europe.

Deutsche Bank on Wednesday said it expects to take a 6.2 billion euro ($6.98 billion) charge against assets in its investment bank and retail- and private-banking operations for the third quarter. Later this month, the WSJ said, new CEO John Cryan “will announce a new strategy, widely expected to ratchet up the bank’s earlier attempts to cut costs and shed unwanted assets.”

Credit Suisse CEO Tidjane Thiam, who joined the bank in July, is expected to outline both sharp investment banking cuts and possibly a substantial capital increase during the bank’s Investor Day on Oct. 21. A poll of investors by Goldman Sachs analysts found 91% expected the bank to raise more than 5 billion Swiss francs ($5.16 billion) in fresh capital.

Standard Chartered, under new chief executive Bill Winters, is also considering raising equity. Jefferies analyst Joseph Dickerson told the WSJ wrote that the bank could raise as much as $8 billion.

Banks that have already made moves to restructure include Barclays, HSBC, and Royal Bank of Scotland.

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