Deutsche Bank is to axe vast swathes of its trading desks in one of the biggest overhauls to an investment bank since the aftermath of the financial crisis, in a restructuring that will see 18,000 jobs go and cost 7.4 billion euros.

The plan represents a major retreat from investment banking by Deutsche Bank, which for years had tried to compete as a major force on Wall Street.

As part of the overhaul, the bank will scrap its global equities business, scale back its investment bank and also cut some of its fixed income operations, an area traditionally regarded as one of its strengths.

The bank will set up a new so-called "bad bank" to wind down unwanted assets, with a value of 74 billion euros of risk-weighted assets.

Read more: Deutsche Bank to set up 50-bln-euro bad bank

The depth of the restructuring shows that Deutsche is coming to terms with its failure to keep pace with Wall Street’s big hitters such as JP Morgan Chase & Co and Goldman Sachs.

Chief Executive Officer Christian Sewing, who now aims to focus on the bank's more stable revenue streams, said it was the most fundamental transformation of the bank in decades. "This is a restart," he said.

"We are creating a bank that will be more profitable, leaner, more innovative and more resilient," he wrote to staff.

Sewing will now represent the investment bank on the board in a shift that illustrates the division's waning influence.

Investors cautious about the turnaround plan

Michael Huenseler, head of credit portfolio management at Assenagon Asset Management, said a lot had to go right for the plan to be successful.

"The margin for error is... low," he said.

Union Investment portfolio manager Alexandra Annecke said the steps were long overdue and noted that the bank's aim to bring down its cost-to-income ratio to 70 percent was not ambitious compared with international competitors.

Job cuts

Soon after becoming CEO last year, Sewing started to cut jobs and promised to bring staffing "well below" 90,000. There were media reports that Deutsche Bank could cut as many as 20,000 jobs – more than one fifth of the total employees.

The board said on Sunday it would reduce headcount to 74,000 by 2022, making it one of the biggest announcements of job cuts at a major investment bank since 2011 when HSBC said it would axe 30,000 jobs.

Deutsche bank gave no geographic breakdown for the job cuts. The equities business is focused largely in New York and London.

Deutsche said it expects a 2.8 billion euro (3.1 billion U.S. dollars) net loss in the second quarter as a result of restructuring charges and loss for the full year.

Deutsche will have been in the red for four out of the five last years. Its shares fell to a record low last month.

(With input from Reuters)