Following reports that Deutsche Bank is cracking down on its big spending investment bankers after they racked up a €22m travel bill (which seemingly involved the use of limousines) we understand there's some upset in Deutsche's investment banking division (IBD).
Members of Deutsche's IBD team say they feel unfairly maligned by Alasdair Warren, the head of Deutsche Bank’s corporate and investment bank in Europe, the Middle East and Africa (EMEA), who's leading the expenses squeeze.
"Warren made it clear in 2017 that he was going to track bankers to make sure they were actually out meeting clients. So increased travel costs shouldn’t exactly be a surprise," complains one Deutsche banker, speaking off the record. "- We're being lambasted for expenses that he created." Another confirms that Warren, who joined Deutsche in November 2015 from Goldman Sachs for what was rumoured at the time to be a large guaranteed bonus, asked Deutsche's bankers to spend more time writing up, "meeting reports." - "You can't have meeting reports without meetings and you can't have everyone in Europe covering the UK and Germany, so some extra international travel was always inevitable."
Deutsche declined to comment for this article, but supporters of Warren point out that he wasn't complaining about additional travel per se, but about additional travel by unnecessarily expensive means. Travel at Deutsche is fine, as long as it involves bank-approved suppliers.
Nonetheless, disgruntled insiders suggest the travel-related spat is symptomatic of a deeper malaise in Deutsche's investment banking division after the bank withheld performance bonuses for 2016. "People felt they have a right to something beyond what was needed to get the job done," says one MD. "There's fear and loathing, and indiscipline on costs." Another IBD banker claims the high costs were run-up by "Warren's men" - "expensive rainmakers," whom he hired and should have kept closer track of.
Whatever the reality, it's hard to argue that Deutsche's EMEA M&A business is thriving. Before Warren arrived, Deutsche ranked fourth for EMEA M&A in 2015 and sixth in 2015. Last year, it ranked ninth by volume and seventh by value according to Dealogic. Insiders complain of a lack of strategy and a switch from focusing on M&A to transaction banking and then back to M&A again.
Amidst the complaining, it seems Deutsche is pulling the trigger on senior level redundancies. Jonathan Gold, head of financial institutions group (FIG) debt capital markets at Deutsche has reportedly been put at risk after working at the bank for six years. Reuters says Gold is one of several senior staff to go in "deeper than usual" annual cuts after revenues across Deutsche's origination and advisory business fell 3% last year.
Warren's detractors may blame him for the division's woes, but some Deutsche insiders say it could have been worse. "Jeff Urwin wasn't great," says one, of Warren's predecessor. "- He told a whole group of us,'I came here, thinking I was getting a Mercedes, but instead I found it was a FIAT.' He lost a whole room right there."