Deutsche Bank’s German investment banking boss is confident that uncertainty over its restructuring is behind it and that the bank will climb the league tables after another chastening year in its home market. Deutsche slipped two places to fourth in the German corporate finance fee rankings in 2019, and dropped to seventh by M&A fees, according to Dealogic.
Patrick Frowein, who is head of Deutsche’s investment bank for German speaking countries, says the bank is well positioned to boost its standing following last year’s restructuring. “The rankings are close between second and fourth position. What’s more important is that we have a very solid team on the ground. We have strong local coverage and the senior team in Germany has been in place for the last three years despite changes in the broader group.”
The bank’s German corporate finance business continues to be run by Berthold Fuerst after Frowein, his fellow former co-head was promoted to his current role last year.
Deutsche has beefed up its corporate finance presence in Frankfurt in recent years, building out dedicated industry teams in automotive, industrials and real estate, and FIG but Frowein says this is not the result of a concerted push and the bank has no big hiring plans in Germany in 2020. “We are not trying to build mini-sector teams in our home market. This is more to do with finding good bankers – we are agnostic about where they are located in Europe.” For example, Jochen Gehrke, co-head of the bank’s automotive practice for EMEA and Philipp Leising, head of its EMEA diversified industrials practice, are based in Frankfurt.
Deutsche will always be more harshly judged at home, where it wants to regain its crown as Germany’s leading investment bank. Years of introspection and internal upheaval have taken their toll and its market share in corporate finance stands at 6.9%, compared with 11.8% at market leader JP Morgan.
Deutsche’s new strategy is based around serving its blue-chip clients on a global basis with everything from M&A advice to transaction banking. Germany is also the biggest market for its newly-formed corporate bank under Stefan Hoops.
A lack of big deals in 2019 prompted big U.S. banks such as Goldman Sachs and BofA Securities to establish dedicated M&A teams to service the mid-market and in Germany, much is made of the opportunity to serve the country's Mittelstand companies. But Deutsche has resisted the temptation to follow its rivals and prefers to stick to the model it has deployed for many years.
Frowein said: “Many Mittelstand firms will never do an M&A deal, so banks can run the risk of setting up a parallel M&A team only to discover that the volumes are not significant enough to sustain it. We take a different approach in Germany, where we look at the 1,000 largest clients and talk to our corporate banking colleagues about which clients are most likely to need capital markets or M&A solutions.”
Henning Wagner one of the bank’s Frankfurt-based investment bankers, is responsible for delivering corporate finance products to this group. The bank admitted that the restructuring led to market share losses as it took time to explain is new direction to clients, particularly with regard to equity capital markets following the closure of its cash equities platform.
“We have a real intensity around ECM now because our specialist sales and research teams have a more focused agenda and are no longer involved in secondary sales and trading,” said Frowein, who points to the bank’s role on IPO of French bottling company Verallia as a vindication of its model, and one that he is confident will lead to mandates in Germany. “Clients have now digested the new strategy and we are seeing lots of positive momentum,” Frowein added.
Deutsche has started 2020 on a strong note with a role on one of the country’s biggest deals. It is understood to be advising engineering group Thyssen Krupp along with Goldman Sachs and JP Morgan on the potential sale of its lifts business which could fetch up to €20bn.
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