Deutsche Bank quietly lost bankers in the second quarter, while revenues soared

Deutsche Bank is no longer steadily accumulating bankers and traders in the front office of it investment bank. 

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In 2023, the German bank added tens of people in the first two quarters and a couple of hundred new front office people in the final quarters as it completed the acquisition of Numis in the UK. In 2024, it seems to have been slowly trimming things back. The population of bankers and traders at the bank is dwindling: it fell by 1% or 48 people between the first and second quarters and is down by 77 people since January.

The diminution might be down to staff attrition rather than a program of cuts, but it's a reminder that - after adding 75 directors and managing directors and 125 bankers in total in an eighteen-month period - Deutsche is now letting them bed-in.

The bedding-in appears to be going well.  As the chart below shows, the growth in Deutsche Bank's M&A revenues in particular is off the charts versus rivals.  The bank said today that it has gained 70 basis points of market share and raised its rank across the investment bank from 11th to 7th in the first half. Pipelines are firm and the outlook is "encouraging", even though the bank is cautioning about a summer lull that may make a repeat of Q2 hard to achieve.

Things seem less ripe, however, in the fixed income sales and trading business which was the favourite of Deutsche's investment bank before the new high-performing M&A bankers came along. Deutsche has been steadily losing key people from its rates desk in particular. Fixed income sales and trading revenues fell 3% year-on-year as Deutsche complained of "ongoing uncertainty about central bank interest rate policies," which is presumably creating the wrong kind of volatility. At Goldman and Morgan Stanley, fixed income sales and trading revenues were up by double-digit percentage terms. Goldman said its own rates trading revenues were "significantly higher" in Q2. 

Profits in Deutsche's investment bank were up 36% year-on-year in the first half. However, anyone expecting a higher bonus at this stage might be disappointed: Deutsche is keeping a firm grip on pay and although it's increased compensation spending by 9%, this is simply in line with the 9% increase in investment bank headcount compared to last year. Distressed debt traders like Mark Spehn and Chetan Shah presumably won't be getting enormous bonuses this year, given that DB said today that last year's "strong" distressed debt performance hasn't been repeated. 

Across the bank as a whole, cuts have not finished. DB is stripping €2.5bn of costs and still has €1.3bn of them to go. It plans to cut nearly 900 people from all its operations this year and removed 700 during the second quarter alone. The investment bank got off lightly; people in Deutsche's corporate and private banks were hit worse. 

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