Sewing: "Have not lived up to our responsibility"
Deutsche Bank has apologized to its customers for the Postbank debacle. "We have not lived up to our responsibility," said CEO Christian Sewing on Thursday at the Handelsblatt Banking Summit in Frankfurt. He acknowledged that there was nothing to sugarcoat about the situation, and the bank could only apologize for the current state. Nevertheless, Sewing added that this was the largest IT project in the European banking landscape.
The project in question is "Unity," which involves the IT integration of Postbank into Deutsche Bank Group. This required migrating 50 billion records of over 12 million customers, but it encountered significant problems, resulting in some customers being unable to access their accounts.
The complaints reached a level that prompted financial regulators to intervene. BaFin Chief Mark Branson publicly criticized the bank, stating that it was a unique situation to have so many complaints about a single institution, and the bank needed to resolve the problem quickly.
Deutsche Bank plans to fix Postbank's IT issues this year
Sewing promised to do just that. The bank intends to address the major problems in the third quarter, but it will still require the fourth quarter to clear the entire backlog. According to Sewing, the most critical backlog is in regards to seizures and loan disbursements. The bank has already resolved 70% of the backlog for seizures, but Sewing did not provide specific figures for loan disbursements.
Christian Sewing, Deutsche Bank
We had allocated too few resources to respond to customer inquiries.
"We underestimated the volume of customer inquiries during the IT transition," Sewing admitted. As a result, the bank has since increased its workforce by 400 to 500 employees. Sewing emphasized that this is not about costs but about satisfying their customers.
The bank will consider compensations for customers on a case-by-case basis if there are legal oversights by Deutsche Bank. Whether the Postbank debacle will have personnel consequences remains uncertain, as Sewing did not comment on this matter. The focus is currently on resolving the problem and rebuilding trust.
Deutsche Bank aims to become less reliant on interest rate spreads
It remains to be seen if the bank's promise is enough to avoid sanctions from BaFin. Branson did not provide a clear answer at the event, stating, "I think everything has been said about Postbank in general," but he pointed out that the case was extraordinary. "We will observe how this all unfolds." Branson did not rule out the possibility of further sanctions.
Overall, Sewing sees the Unity project and Deutsche Bank on the right track. The bank has reached an intermediate step in its transformation and demonstrated its sustainable profitability. To achieve a return on equity of over 10%, it is crucial to continue growth in the corporate banking and retail banking sectors over the next three to four years.
Sewing emphasized that the bank needs to become less dependent on interest rate spreads. The bank is currently investing in its advisory business, including M&A and IPO consulting, as well as retail banking and wealth management. Private retirement planning, in particular, is a central component for Deutsche Bank's 20 million retail customers.
Sewing's call to action
In the pension issue, Sewing sees a major challenge for Germany. However, he doesn't want to paint a bleak picture of Germany: "We are not the sick man of Europe." Nevertheless, Sewing expressed concerns about the attractiveness of Germany as an investment destination. When foreign investors ask him whether Germany had ambitions for further growth, that is an alarm signal, Sewing stressed. Therefore, he appealed to politicians to reduce bureaucratic hurdles.
Christian Sewing, Deutsche Bank
We are not the sick man of Europe.
He further vehemently rejected the proposed 4-day workweek. "We simply cannot afford a 4-day workweek," said the Deutsche Bank-CEO, who also took issue with the general work attitude. He criticized the term "work-life balance" for creating a distinction between work and life. "We should get used to the idea that work is part of our daily lives again," noted Sewing.