Sunday 23 October 2016

Now embattled Deutsche loses market share on its home turf

Aaron Kirchfeld, Donal Griffin and Jan-Henrik Förster

Published 12/10/2016 | 02:30

Deutsche Bank's Frankfurt HQ
Deutsche Bank's Frankfurt HQ

Deutsche Bank, battling to retain confidence among some shareholders and clients, is losing market share across investment banking in Germany and Europe, once considered its unbreakable home turf.

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The Frankfurt-based firm has slid from the top position to No 7 on mergers and acquisitions involving German firms and to No 9 on European deals this year from sixth place in 2015, according to data compiled by Bloomberg.

The worst blow came when Deutsche Bank missed out on the biggest ever German takeover, Bayer's $66bn acquisition of Monsanto.

Some of the bigger US banks are pushing to win market share in Germany and Europe as Deutsche Bank grapples with rising costs tied to its restructuring plan, said rival bankers.

Others cautioned against underestimating the German firm's strength in its home region.

"The American banks have taken share from us," Alasdair Warren, the head of Deutsche Bank's corporate and investment bank in Europe, the Middle East and Africa, said in an interview on Bloomberg TV.

"Through the latter part of last year and the early part of this we were frankly quite distracted by a bunch of internal related issues."

As 2016 draws to a close, Mr Warren is confident his firm can gain back some lost ground, citing demand from European and international clients. "I think we're going to see it pick up again," he said. Faulted by Britain's Financial Conduct Authority over lapses in its vetting procedure, Deutsche Bank is scrutinising clients more closely. In some areas of business, the lender can take five times longer than in the past to approve deals, a person familiar with the bank's practices said.

Chief executive officer John Cryan has boosted the amount of countries that the bank deems high risk to 109 from 30, sources said previously.

"They are deliberately reducing their presence in some investment-banking areas, which could explain the falling in those league tables," said Neil Smith, a Bankhaus Lampe analyst who has a buy rating on the stock. "News flow over the last months hasn't necessarily helped."

The league table losses stretch beyond M&A to equity and debt sales. Deutsche Bank has lost ground in equity offerings in EMEA in the last few years, dropping to sixth place in 2016, down from no 1 in 2014, according to the data.

The company ranks eighth on lending in EMEA, its lowest position since 2009, and is down to No 3 on European bonds after holding the top spot for five of the last six years.

John Cryan, meanwhile, is working to win back the approval of regulators and investors. He's called 2016 a peak restructuring year as he works to eliminate thousands of jobs and cuts risky assets. (Bloomberg)

Irish Independent

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