Deutsche Bank's M&A bankers tell us they're worried. They have reason to be. Last week's sudden loss of 150 jobs following the closure of the Houston office and evisceration of the oil and gas M&A team in London and the U.S. has created fear. Who's next in line?
The paranoia is particularly acute in some of Deutsche's biggest and least successful industry teams. Dealogic says Deutsche Bank ranked outside the top 10 for European M&A in the first quarter of 2018; it even ranked outside the top 10 in Germany. Nonetheless, the bank employs plenty of M&A bankers in London. Insiders say the London healthcare team has around 14 people, that the chemicals team has around 8 people and that the broad industrials team has over 30.
"We spend a fortune on M&A and have almost nothing to show for it," says one DB insider. "Deutsche Bank M&A is a joke," says another. "It's done nothing but cost us a fortune. It's a shame. The pipeline is always supposed to be "huuuge" but nothing seems to come of it."
Deutsche Bank didn't respond to a request for this article. However, when he outlined his strategy for the bank last month, Deutsche's new CEO Christian Sewing said he wants DB to be the, "leading European corporate and investment bank." Sewing said that any investment banking division (IBD) teams which deal with European clients (and particularly German clients) and support their activities overseas, will therefore be maintained.
In this context, pulling the plug on the global oil and gas team looks particularly ominous. As the chart below shows, oil and gas was one of Deutsche's better performing teams in EMEA this year. If the oil and gas team can be cut overnight, what about healthcare, transportation, industrials? What about...telecommunications?
"The firings in oil and gas were completely unexpected here," says one DB insider. "People in that team had been promoted and paid decent bonuses. We're in a sit tight and see scenario - or a jump ship and hope for the best."
Morale in DB's M&A is reportedly being made worse by the presence of big name hires brought in by Alasdair Warren, the head of Deutsche Bank’s corporate and investment bank in Europe, the Middle East and Africa (EMEA).
Warren is squeezing expenses in Deutsche's M&A team, despite hiring-in various expensive rainmakers whom colleagues suspect are on guarantees. - Warren himself is thought to have joined Deutsche Bank on a multi-year guarantee when he arrived in 2015. Deutsche's M&A business ranked ninth and seventh by volume and value in EMEA last year. Before Warren's arrival, it was closer to sixth. Something needs to be done.