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8 | September 2009 | ifr special report GERMANY “ Staying the course


In spite of its trading businesses being badly hit by the fallout from the collapse of Lehman Brothers, Deutsche Bank appears to be coming through the credit crisis with franchises intact and the firm better positioned to cope with new market realities. It has lost one domestic competitor, as Commerzbank completed its takeover of Dresdner Bank, but with the new combination focusing on domestic clients above all, Deutsche now stands as the one firm with global ambitions. Mark Baker reports.


The bank ”T


is also notable among global peers for having stuck with its top man. Chairman and CEO Josef Ackermann has won plaudits for his representation of the industry in his capacity as chair of the International


Institute of Finance.


he last year has seen the disappearance of one major player in German banking, as Commerzbank finalised the acquisition of Dresdner Bank


from insurance giant Allianz. But in spite of its domestic significance – and the loss of a venerable investment banking brand in Dresdner Kleinwort – the deal has not substantially changed the competitive landscape in the country’s banking sector. Although rivals argue that it is scarcely a German bank any more in terms of the dis- tribution of its activities, Deutsche Bank has remained the country’s only global player in the sector. The stated strategy of Commerzbank is to focus much more on its home market and far less on the attempt to create a global footprint that was the ambition of former Dresdner Kleinwort head Stefan Jentzsch. Senior executives at Deutsche Bank are careful not to appear to be sidelining the firm’s domestic business, but also stress that the firm’s focus is resolutely global, or at least pan-European.


“What is going on domestically is important but it does not define our strategy,” said one senior banker. “When thinking about investment banking, Germany is not as critical for us as the US is to Morgan Stanley or Goldman Sachs.” That means that, from an investment banking and capital markets point of view, the new combination of Commerzbank and Dresdner Kleinwort will make little impact on Deutsche. In the home market, Commerzbank is likely to strengthen its corporate banking and lending activities to the mass of mid-sized German corporates, as well as to its target group of the top 90 or so firms in the country, but internation- al business will continue to be the preserve


of its rival. In particular, bankers at Deutsche say that it must ensure that it dominates cross-border work involving German clients. And by many measures, Deutsche has had a good crisis. It has survived without the need for direct government financial assistance, although it has obviously benefited – as have large banks all around the world – from implicit government support.


The trading opportunities that were the feature of the start of 2009 also played to the bank’s strengths. The €3.8bn of fixed income sales and trading revenues that it posted in the first quarter of this year was a record for the firm, and although some analysts expressed concern that the bank was not able to maintain such a dramatic performance in the second quarter (with €2.6bn), Deutsche executives point out that these results have been achieved even as the firm has dramatically delevered its balance sheet and slashed value at risk in its trading operation. Some rivals, say Deutsche bankers, are continuing to be reckless.


The bank is also notable among global peers for having stuck with its top man. Chairman and CEO Josef Ackermann has won plaudits for his representation of the industry in his capacity as chair of the International Institute of Finance, and at the start of 2009 had his contract extended with Deutsche Bank.


Back to black


But it has nonetheless been a traumatic period for the firm. In the first quarter of 2008, it suffered the ignominy of its first quarterly group loss for five years. Although the bank had looked smart at the very start of the crisis – one of its analysts


ifre.com


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