In general, people don’t want to apply for jobs at banks that are in the middle of big staff reduction plans.
For one thing, it’s demoralising and often makes for a nasty corporate culture. For another, it runs the risk of turning into a blot on your resume – it doesn’t look good to future employers if you’ve been around during a period when a strong global franchise melted down. And finally, job cuts tend to lead to job cuts; since investment banking is in industry in which scale matters and so does confidence, banks that have big reductions often see revenues falling faster than costs, and they tend to react to this by assuming that it means they need to cut even more costs.
So it wouldn’t be unreasonable to think that Deutsche Bank might have trouble attracting top talent in the near future for the businesses that it does want to preserve. But actually, is there a case to be made for working there?
It’s true that Deutsche is probably now retreating from global bulge bracket status, which requires you to have cross-product coverage and to compete directly with the biggest US firms in their home market. But bulge bracket status isn’t the be-all and end-all of the investment banking industry. Look at the equity derivatives market for example. Although they are well outside the bulge bracket in most products and geographies, BNP Paribas and SocGen are among the top players in global equity derivatives, and certainly both the French banks are an excellent place to make a career in that market sector.
In many ways, it is good news for long term career planners that Deutsche is no longer going to shape its investment banking strategy around an ambition to compete on an equal basis with the largest U.S. players in their own home territory. As an attempted market entrant to the US top tier, it was always doomed to periodic failures and high turnover of top management, as scapegoats were always needed for the failure of the latest attempt to push into the top three. As a
national champion of Euroland, it could build a sustainable and profitable franchise, particularly if the Capital Markets Union ever becomes a reality.
And the numbers seem to add up. Although Deutsche is planning “significant” job reductions in the US and Asia, it only seems to be willing to promise reductions of around 3% of the investment bank’s cost base to its shareholders. That might mean that a proportion of the savings made elsewhere in the world could be reinvested in Europe.
The twenty year adventure that began with Deutsche’s acquisition of Bankers Trust may be coming to an end, and that’s bad for the people whose jobs depended on it. But Deutsche has always been a strong name and franchise in its own home territory and if it concentrates on that and on its particular product strengths in real estate and in payment services, it could be, paradoxically, a much better place to make a long term career than it has been for the last two decades.
Dan Davies, is a senior research advisor at Frontline Analysts and a former banking analyst at Cazenove, Credit Suisse and BNP Paribas.
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