Deutsche Bank Cash on trend but to Little Benefit
Published By : 25 May 2015 | Published By : QYRESEARCH
European banks have spent the years since the financial crisis distancing them from investment banking. Encouraged by regulators and tighter rules on everything from capital to leverage, bosses have emphasized their more down to earth activities. Anything involving risky securities has been slimmed - or closed outright.
Many have simply walked away completely. Even one-time contenders for global investment banking status such as Barclays and UBS are withdrawing from the scene.
Just one bank has genuinely bucked the trend, and that is Deutsche Bank. Under the leadership of its deputy-chief executives, Mr. Anshu Jain and Mr. Jürgen Fitschen, the German lender has alone kept the idea of a full-service European investment bank alive.
Not only has it a business spanning debt, currencies and equity securities, but its explicit strategy is to reap the benefits of others’ departure, achieving the gains from being the last man standing on European soil.
Europe is admittedly not the most fertile ground for investment banking. Many companies remain heavily dependent on bank loans from house banks to fund their businesses. Debt capital markets are relatively undeveloped. What gives Mr. Jain confidence is Deutsche banks close relationship with some of most vibrant exporting companies of Europe and Germany. The bank expects to receive the big influx of business as these groups come to rely more on markets for finance.
But behind the confidence is also recognition that the bank has no obvious fall back strategy should this fail. German retail banking is unattractive, a highly competitive market dominated by public-sector banks and mutual serving a population whose aversion to borrowing is encapsulated in the fact that the German word for debt is the same as that for guilt.