There’s no detail on this yet, because Jürgen Fitschen and Anshu Jain’s big Deutsche Bank strategy presentation doesn’t start properly until this later afternoon. However, a PDF of the presentation has been posted to Deutsche’s investor relations site already. And this contains plenty of information about their intentions.
At the risk of overloading you with summaries of banks’ strategic intentions (following Barclays’ presentation yesterday), these are the key points.
1. At the top level, Deutsche wants to expand in Germany, the US and Asia. But not elsewhere
In the US, Deutsche wants to invest in its equities business and is corporate finance business. In Asia it wants to invest in flow sales and trading and in India, China, Korea and the ASEAN (Indonesia, Malaysia, Philippines, Singapore and Thailand.) In Europe, it wants to ‘streamline resource consumption in line with growth prospects,’ and ‘commit to the leading institutions and corporates.’
This suggests Deutsche will be slimming down in Europe and not committing to smaller European corporates and mid-sized firms. Anyone dealing with smaller firms may be at risk of redundancy. Click the thumbnail below for the full slide.
2. Deutsche’s FICC bankers should be mostly fine
As with Barclays, Deutsche plans to protect much of its leading fixed income currencies and commodities business. Here it says it plans to “leverage” the platform.
More ominously however, Deutsche also says it wants to “industrialise processes” its FICC business. We take this to mean that it plans to follow Goldman Sachs, Morgan Stanley and RBS and push further into electronic trading. This could be bad news for voice trading and sales trading professionals, but good news for IT programmers and electronic trading specialists.
3. This year, redundancies at Deutsche Bank will be in infrastructure, equities and corporate finance. Next year non-compensation costs will be cut. In 2014, compensation will be reduced for all who remain
Deutsche has a big cost cutting programme. It wants to save €4.5bn in costs annually by 2015, of which €1.1bn will be taken out of corporate banking and securities (annually). By 2015, €0.8bn of this annual saving will come from reduced infrastructure costs in the investment bank. 600 infrastructure jobs have bee cut.
Click the thumbnail below for more information….
Deutsche is also taking out costs from the front office of its investment bank. In 2012 it plans to remove 900 front office investment bankers with a focus on equities professionals and corporate financiers in the EU and APAC. Next year, it’s cutting non-compensation costs. Longer term, it plans to cut pay for its investment bankers. If you survive the axe at Deutsche, you will earn less.
4. There may be more risk hiring at Deutsche
Even while Deutsche is cutting infrastructure costs, it may build in risk. It plans to continue investing in, “risk control, transparency and early warning systems.”
5. There may be more hiring in transaction banking at Deutsche
While corporate banking and securities looks a little lacklustre, Jain and Fitschen are far more enthusiastic about about transaction banking where they want to double profits. This will be achieved by growing trade finance and corporate cash management and expanding their securities services offering.
We’ve said before that transaction banking is a big area of growth and job creation. This confirms that.
6. There is very bad news about senior compensation in the investment bank
Deutsche Bank aspires to reduce compensation in the investment bank by 2014. However, it is also taking some measures to curtail compensation in the short term.
Most importantly, it plans to extend the equity vesting period for senior managers from 3 to 5 years and during this time there will be no interim payment on deferred bonuses. All senior bonuses will therefore be subject to cliff vesting after 5 years. This sounds like bad news – especially as the new policy will reportedly be rolled out not just to the executive committee but to 150 senior managers.