Deutsche sets out its stall: no big redundancies, a moderate reduction in bonuses, long term commitment to growing investment banking market share

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The joy of Deutsche

Today is the day of Deutsche Bank’s fourth quarter results. 

Things are looking comparatively fine at Germany’s big bank. Despite a fourth quarter pre-tax loss of €138m (down from a profit of €719m last year) despite a full year cost/revenue ratio in the corporate and investment bank of 76% (up from 69% last year), despite cutting corporate and investment banking headcount by a mere 429 over the year, Deutsche has no big plans to make more redundancies.

In today’s conference call, Anshu Jain declared he’s more a tweaker than a wholesale cutter. “I am not a big fan of building up and cutting back, so don’t expect anything dramatic in terms of headcount cuts, unlike the competition,” said Jain.

He also made very promising noises about Deutsche’s commitment to investment banking, claiming: “We don’t intend to cut down on investment banking as many other banks are doing, but we intend to grow further and will be providing the necessary resources for that,” and:  “Many peers are in the process of closing down their investment banking units, by contrast Deutsche bank is one of the very few banks that will be offering the full gamut of investment banking services in the future.”

In particular, Deutsche plans to strengthen its equities business and continue building in Asia Pac. Asia was heralded as one of the bank’s “core priorities,” and Jain said they will “continue to invest” there.

Less promisingly, he acknowledged the unlikelihood of investment banking revenues reaching the levels of the past any time in the near future. He also said 2012 has started worse than 2011 and that January was, “below previous years.”

However, Jain reiterated that Deutsche is growing market share and intends to be one of the big investment banking players of the future. He also said that total bonus pool is down a mere 17% (although the cash bonus pool is down 37%) and that an average of 61% of compensation is deferred.

Mean compensation per head in the corporate and investment bank in the fourth quarter was €333k, down from €379k in 2010.

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