How does it fit into their overall strategy?
Deutsche bank’s strategy 2020 can be divided into 6 key plans to be achieved by the year 2020. The first is to reposition the CB & S. This would be achieved by delivering sustainable client driven franchise by reducing transactional business and focus product suite, and invest in client solutions, advisories and equities.
The second is to reshape retail by refocus through deconsolidating Postbank and transforming deutsche bank into a leading digitally enabled advising bank for private and commercial bank. The reason they are seeking to dispose off Postbank is that there has been struggles to boost revenues at Postbank and reap benefits from integrating it.
New banking rules, ultra low interest rates and fierce competition in Germany’s retail banking market are also significant reasons.
Return on equity has been low recently in the retail banking and dropping post bank would help increase the share price of Deutsche bank. They hope to digitalize their bank, and be more customer centric with internet banking solutions for existing and new clients.
Deutsche bank plans to scale up the global transactional banking division and aggressively invest in the future growth of her asset and wealth management division. Their aim is to rationalize their geographic footprint by exiting or reducing their presence in a number of countries Deutsche bank thinks is not profitable, and then invest in high growth hubs.
Then finally, Deutsche bank would redesign their operating and governance model to achieve higher efficiency, reduced complexity, stronger controls and easier resolvability. In an analysis of the above strategy, a move to expand into the Romanian market is seen to be partly in line with the overall strategy.
The bank seeks to use its corporate banking and securities division to cement its leading position in Europe, and Romania is a member of the European union. She also aims to firmly establish herself as a global leader by increasing assets under management and invested assets to about 1 Trillion pounds.
We arrived at a conclusion above that a move to the Romanian market by Deutsche bank seems to be partly in line with their overall strategy, and this is because For a move to the Romanian market, it must be proven that the market is highly profitable with opportunities Deutsche bank can leverage; and also it must not be over saturated by the existing banks with little room for growth and increasing the bottom line.
This is because deutsche bank has a strategy to reduce or exit their presence in low growth countries and invest in high growth hubs such as china and India. So Romania has to prove they are an high growth country for deutsche bank to invest in.
ROMANIA
Romania is a country located in Europe; it is a member of the European union. It is the seventh most populous member of the Eu with a population of 19.94 million people. Under successive assistance programs, key macroeconomic imbalances in Romania concerning the current account and fiscal policy have been considerably reduced and financial sector stability has been maintained.
Romania was largely affected by the financial crisis and is still on a process of recovery. Growth reached a 2.9% in 2014 and is expected to remain robust. Unemployment remained contained at around 7% while inflation recently decreased significantly. Fiscal consolidation was front loaded but spread over various years. The current account deficit of more than 10% in 2006 – 2008 was largely corrected to around 19% of GDP in 2012 on the back of strong exports and only temporarily reduced imports; this correction contributed to improving the negative net international investment position to 60% of GDP.
The banking sector weathered the crisis well and capitalization remains strong. Romania’s negative net international investment position ( stock of external assets minus the stock of external liabilities, which means the value of foreign assets owned by private and public sector of a country minus the value of domestic assets owned by foreigners) remains a source of macroeconomic vulnerability. However export growth points to improved macroeconomic resilience.
Formerly unsustainable account deficits have been corrected and are expected to remain contained. labor productivity started to improve only recently, and cost competitiveness is still not ensured. Non- cost competitiveness is still hampered by low investment and innovation and an unfavorable business environment. Access to finance remains difficult particularly for small and medium sized enterprises, and unstable tax policies constrain investments and exports. Inefficiencies in state-owned enterprises dominating key sectors like energy and transport are a burden on public finances and a drag to the entire economy.
