Apply to Deutsche Bank's exit investment bank is a liability? – Quartz

How many investment banks are too many investment banks?

This week, Deutsche Bank started a big withdrawal from the business. Germany's largest bank cuts a fifth of its workforce – approx. 18,000 positions – and reduces investment bank and trading units. Nevertheless, the most radical restructuring will see it focus on more staid corporate banks for primarily European customers.

The Frankfurt-Germany-based company gets all the attention now, but it's not an outlier. Every major bank has undergone thorough consideration since 2008. That year, several top companies in Manhattan were extinguished by other banks, and Lehman Brothers collapsed. The royal bank in Scotland fell from the sky shortly after. The government watchdogs in the US and Europe who pulled the financial system back from the brink set out to build a safer and more stable financial industry.

They succeeded largely. That means risky things like buying and selling securities are not the moneymakers they used to be. Goldman Sachs, known for its trading expertise, has entered retail banking. Its nemesis Morgan Stanley switched to wealth management – a pay-off move. Switzerland's UBS and Credit Suisse reduced their investment banks, such as RBS in the UK, and Japan's Nomura has stumbled outside its home market.

The five major US banks, which also include JPMorgan, Bank of America and Citigroup, are on top of what's left, but it's not quite the full oligopoly that it seems to work. Francesc Rodriguez Tous, CFO of the Cass Business School in London, believes they are still facing strong competition, but often from more scary non-banks. Automated high-frequency trading companies are pushing deeper into their turf, which is specialized, investment investment banks. Startup points to your feet, and big technology like Facebook circles.

So is the investment bank threatened? Not completely. There is still a lot of money to be made in economics, and members of this smaller group, mostly American mega-banks, are still too big to fail. But Deutsche Bank's overhaul is a recognition that the world does not accommodate as many large banks as it used to be, which other companies have recognized for years. If the trends of the past decade continue, their class may be less.

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