Deutsche Bank has moved to quash speculation that the beleaguered European firm may seek to wind-down its investment banking operations in the U.S., with one prominent figure at the bank telling CNBC that it was positioned for a long future in the country.
“We’re all in a long-term game”, Alasdair Warren, Deutsche Bank’s head of corporate and investment banking (CIB) EMEA, told CNBC Wednesday.
Addressing the importance of following a coherent cross-border strategy, Warren clarified that the U.S. CIB division formed an inseparable component of the German bank’s offering.
“We have built over the last fifteen, twenty years a global franchise and if you’re going to be globally relevant you have to have a meaningful presence in the U.S. in the same way you’ve got to have a meaningful presence in Europe – which we clearly have – and a meaningful presence in Asia,” he posited.
“That will continue,” Warren confirmed.
The clear statement follows reports from earlier this week suggesting Germany’s largest lender was strongly considering shrinking its U.S. CIB unit to offset the high level of capital required to cover rising legal costs.
Chief Executive Officer, John Cryan, has told investors he does not intend to pursue a capital raise and that he believes the $14 billion payment requested from the U.S. Department of Justice during September will be whittled down. This as cost cutting measures, including a hard-hitting series of job cuts and a broad restructuring of the business, continue apace.
Warren also addressed fears of a vicious spiral revving up in which capital concerns would cause both talent and clients to abandon the bank, saying employees across the sector would need to adapt to a new reality that would be different but offer a recalibrated set of draws.
According to Warren, “It’s not a Deutsche Bank issue but across the whole industry, it has to be much broader than just compensation, it’s got to be all about the opportunity to develop, the opportunity to really broaden your skills and really be able to take a longer-term view around that, and that’s where we’ve been focusing a lot.”
“Compensation dollars or euros at any bank this year with volumes being down are going to be a challenge,” he warned.
Turning to clients, the senior Deutsche Bank executive emphasized that the message he had repetitively heard from clients in his last few months of intense client conversations, was that they consider it essential to have a strong global European bank, particularly within Europe.
Warren said, “Global multinational corporations want to have a choice of advisory services that they can solicit from a range of banks.”
“They need a credible alternative to what is becoming an increasingly U.S. field.”
And while acknowledging that U.S. banks are doing relatively better at the moment, Warren cautioned on the potential for an industry shake-up in the post-Brexit landscape.
“There are definitely incremental challenges of being a European headquartered bank relative to being an North American headquartered bank but let’s not forget that when ultimately Article 50 gets exercised there’s also going to be some important shifts as it relates to North American banks that are currently substantially headquartered in London and passported into Europe.”
“So I think there’s going to be challenges more broadly.”
Warren concluded by sounding an optimistic tone on the takeaways from his ramped up client meeting schedule of recent months, and spoke of his confidence that the bank’s clients would stay with them through the troubles.
“All clients would like any bank to be out of the headlines … That being said they’ve been very keen on continuing to work with us, they want to see a strong Deutsche Bank,” he told CNBC.