Deutsche Bank’s decision to replace embattled CEO John Cryan with retail-focused Deutsche veteran Christian Sewing portends potential bad news for current and potential investing banking employees in the U.S. But the timing could be particularly difficult for a certain subset of U.S. IBD and securities staffers. Deutsche Bank has actually spent the past year selectively adding bankers in the U.S., particularly in its M&A and equities businesses. New hires are now fearful their resume needs to be polished off, yet again.
Sewing told employees in his initial memo after being hired that the corporate and investment bank needs to “free up capacity for growth by pulling back from those areas where we are not sufficiently profitable.” Sewing is well-know from his time in retail for prioritizing local German business over foreign units. Newly-named investment banking head Garth Ritchie added in his own memo obtained by Bloomberg that the bank’s adjusted costs will have a hard, “non-negotiable” cap.
While neither mentioned the U.S. in particular, the comments come just a week after J.P. Morgan analysts said Deutsche needs to scale back its U.S. operations, which consume too many resources while providing “persistently low profitability.” The U.S. business is “in need of shrinking,” they wrote. The bank is also reportedly in the midst of a review of its investment bank titled “Project Colombo.” U.S. operations are said to be a particular focus, according to Bloomberg.
Meanwhile, Deutsche Bank has been hiring in the U.S. The German bank announced just last summer that it was looking to increase its U.S. M&A revenue by 25% over the next one to two years, with the addition of senior bankers being the main driver. U.S. head of M&A Charlie Dupree told Bloomberg in July that he hoped to bring the number of managing directors in M&A up to 20, near the number employed in the U.S. back in 2015. One such hire was former Goldman Sachs VP David Ni, who became heads of banks M&A in the Americas in July of last year, according to his LinkedIn profile.
“A very senior guy over there told me he was expecting a few departures,” one M&A and equity capital markets (ECM) recruiter told us on the condition of anonymity.
Meanwhile, Peter Selman, a former Goldman Sachs partner hired out of retirement in November to run Deutsche’s equities business, said in February that the bank would be hiring in equities, but accentuated that graduate recruiting rather than expensive poaching of senior bankers would be the main growth strategy. Deutsche Bank declined to comment on whether the appointment of Sewing would affect headcount plans in the U.S., including the potential for layoffs.
The league tables in both M&A and ECM show that Deutsche Bank is struggling in the U.S., though they aren’t hemorrhaging market share. For the first quarter of 2018, Deutsche Bank finished 14th in M&A in the U.S., down from 12th during the first three months of 2017, according to Dealogic. In ECM, Deutsche Bank finished 9th during both periods. For all of 2017, the bank finished between 4th and 6th in FICC and between 7th and 9th in equities in the Americas, according to data complied by Coalition.
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