Deutsche Bank’s Long Road Back to Its Old Normal

For decades, Deutsche Bank AG had one predominant aspiration: to compete with Wall Street. In abandoning global stock trading, Germany’s biggest bank is giving up on that ambition. No financial company has exited the equities business of this scale before. As Chief Executive Officer Christian Sewing put it in announcing the company’s restructuring on July 7, Deutsche Bank’s “North Star” will now be closer to its Frankfurt headquarters.

It’s a return to its 150-year-old corporate and trade-finance roots. The sweeping and costly rethink hasn’t come soon enough. Years of mismanagement, multibillion-dollar fines, and declining revenue have eroded the company’s profitability. What was once a powerhouse of global finance has been crippled and left with an uncertain future. Nowhere has the lack of confidence in Deutsche Bank’s ability to survive—let alone thrive—been more visible than in its share price. Down more than 90% from its May 11, 2007, peak to record lows this year, the stock market values the lender at about one-quarter of its physical assets. By comparison, JPMorgan Chase & Co., against which Deutsche Bank vies for business, is eight times more expensive.