Sewing said Deutsche would cut back bond and equities trading, where it has been unable to break the grip of the U.S. powerhouses such as Goldman Sachs and JP Morgan, and would invest in German retail banking and asset management in Europe.
Deutsche Bank's attempts to break into the U.S. markets, which are seen as an essential plank for delivering a global investment banking platform, proved to be costly as it ended up paying out billions of dollars to settle regulatory breaches, prompting speculation at one point of a bailout by Berlin.
Other European banks have also tried and failed over the years, often hiring bankers at great cost or buying smaller Wall Street players in the hope of gaining critical mass.
Deutsche Bank's cull has already begun, one source said, with around 300 U.S. based investment bankers fired on Wednesday and another 100 due to leave Germany's largest bank by Friday.
These job cuts were "painful but regrettably unavoidable to ensure our bank's competitiveness in the long run", Sewing, who has a background in retail banking, auditing and risk, said.
"Deutsche Bank is deeply rooted in Europe - here we want to provide our clients access to global financing and treasury solutions," he added, just weeks after becoming its CEO.
Sewing broke the restructuring news as Deutsche Bank reported a 79 percent fall in its first quarter net profit. The moves are the initial product of a review known as Project Colombo, which is likely to lead to further cuts, bankers said.
Investment banking now accounts for 54 percent of Deutsche Bank's revenues, which fell across all divisions in the first quarter of the year, underlining the enormity of the challenge.
The bulk of the cuts will focus on the U.S. and Asia and involve scaling back business with hedge funds. Restructuring costs for 2018 were likely to hit 800 million euros, from an earlier 500 million euro target, as a result, Sewing added.
Shares in the bank were down by 2.8 percent at 1355 GMT as analysts and investors dissected the figures and sought answers to strategic questions left unanswered by the announcement.
"There are a lot of open questions," said Michael Huenseler, head of credit portfolio management at Assenagon, which owns Deutsche Bank shares and is a critic of the bank.
These included how the new focus on retail will lift Deutsche Bank's revenue and profit, Huenseler added.
Germany's fragmented banking sector is dominated by cooperative lenders and municipally owned savings banks, while wealth management in the region is dominated by traditional private banks like UBS and Credit Suisse, whose base in Switzerland gives them a competitive advantage.
NOT ACCEPTABLE
Sewing said the first quarter results showed the need for "immediate action", adding that shareholder returns were "not acceptable". Earnings fell far short of analysts' expectations, with net income of 120 million euros below the forecast of 379 million, according to a Reuters poll.
The figure was also below the 575 million euros posted in the first quarter of last year.
Hendrik Leber, a fund manager with Acatis, which owns Deutsche Bank shares, said the measures announced on Thursday were "small and moderate" and predicted the bank would make "much more considerable" cuts in three months time.
Although the cuts were expected to have a negative impact on 2018 revenues, they would improve returns in the medium term, Deutsche Bank said, adding it would scale back U.S. rates sales and trading and expected to reduce its global equities platform.
Overall, the bank expects revenues in its bond trading activities to be flat this year and lower in its equities trading and in advisory business, after a steep slide in all three in the first quarter.
By contrast, Goldman Sachs said this month that is so confident in its recent business boom, especially in trading, that it will pause share buybacks and instead use capital to facilitate trades, loans and deals for customers.
All major Wall Street banks have reported bumper first-quarter earnings thanks to a surge in stock trading activity, while Deutsche Bank conceded market share losses.
Deutsche Bank was founded during the Industrial Revolution to finance Germany companies abroad, but it aggressively changed course 30 years ago, buying British merchant bank Morgan Grenfell and then Banker's Trust in New York.
"That was the cardinal sin," Klaus Nieding of the shareholder lobby group DSW said, adding that the powerful investment bank took on a life of its own and faced little supervision from Frankfurt.
(Editing by Maria Sheahan/Mark Potter/Alexander Smith)
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)