Are BarCap and Deutsche fundamentally the same place?

Dixit Joshi is leaving BarCap for Deutsche Bank. Maybe he shouldn't have bothered. According to one banking analyst, the two places are really very similar.

Both banks have a business model in which 80% of their revenues are derived from investment banking, points out Dirk Hoffman Becking, senior analyst at Bernstein Research. And within investment banking, both organisations derive the bulk of their revenues from fixed income currencies and commodities and are trying to diversify into equities and advisory work.

The case for thinking that BarCap and Deutsche were separated at birth is laid out below.

Exhibit number one

Source: Bernstein Research

Exhibit number two

Source: Bernstein Research

However, for anyone torn between doing a Dixit and staying at BarCap, Hoffman Becking also detects differences between the two banks and concludes that BarCap is probably superior. This is on the grounds that a) it has lower exposure to the eurozone, b) it has a far higher RoE (41% vs. 29%), and c) BarCap has proven better at growing its investment banking market share long term.

Interestingly though, Hoffman Becking also points out that BarCap's ability to increase its revenue share appears to have faltered ever since it acquired Lehman and that it was on track to achieve its current market share even without the Lehman acquisition.

The conclusion could, therefore, be that BarCap is the better of the two organisations, except those bits that were once Lehman Brothers...

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