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Why Deutsche Bank Can’t Just Shake Off Its Problems

CEO Christian Sewing is Deutsche Bank's fourth CEO in three years.

CEO Christian Sewing is Deutsche Bank's fourth CEO in three years.

Photographer: Arne Dedert/Getty Images

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It would be an understatement to say Deutsche Bank AG is going through a difficult period. It chalked up its third straight annual loss in 2017. The new chief executive officer, Christian Sewing, has unveiled the bank’s fourth turnaround plan in as many years, yet shares have fallen to a record low. Almost daily, senior executives are being pushed out or are jumping ship. The U.S. Federal Reserve has placed the lender on its list of troubled banks. And its U.S. unit was the only bank to fail the Fed’s annual stress measuring the adequacy of capital and risk controls, pushing back the day when shareholders will see any upside from its biggest foreign operation.

Chief Financial Officer James von Moltke has said the bank is suffering from “a vicious circle of declining revenues, sticky expenses, lowered ratings and rising funding costs.” It’s repeatedly tried to revive growth, without success. The bank’s problems include outdated information technology, weak leadership and heavy fines -- $17 billion in the last decade -- for misconduct. Adverse market conditions, such as 2017’s long stretch of low volatility, which limited opportunities to profit from trading, and a recent credit-rating downgrade have compounded the homemade problems.