Revenue growth Investment revamp at Deutsche Bank puts focus on customers

Deutsche Bank, once the undisputed market leader, desperately needs to keep its corporate and institutional investment clients happy.

Deutsche Bank is revamping its investment banking business in an attempt to recapture market share lost over several years of turbulence at Germany’s largest bank. The idea is to focus on customer groups rather than products, a technique management hopes will improve customer service while boosting revenue.

An institution that was once the undisputed market leader, taking the pick of the crop for itself and leaving the crumbs to competitors, must now scramble to provide services to Germany’s corporations and institutional investors.

One of the reasons Deutsche Bank has lost ground, said Stefan Hoops, co-chief of investment banking, is that customer service representatives were specialized in product lines, such as interest-rate derivatives, stock trading or currency management. This meant customers would have to deal with a succession of different reps to manage all their holdings, and the reps had to reorient themselves depending on what kind of customer was in front of them.

Now customer service representatives will be aligned with a specific customer group, either corporate treasurers, banks or institutional investors such as hedge funds, pension funds, insurers and mutual funds to accommodate their individual needs. The 1,800 reps will be divided along customer lines — 800 for corporate clients, 800 for institutional investors and 200 for banks, Mr. Hoops said.

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This revamp comes at a crucial time for Deutsche Bank: Investment banking revenues have fallen 25 percent since 2015, and fines and settlements have taken a big bite out of its profits.

Deutsche has now succeeded in braking the decline, but needs to start winning back lost ground. It has cut back on its US and Asian business and its share trading to improve profitability.

Targeting growth

Analysts such as Citi’s Andrew Coombs, however, don’t believe these cuts go far enough. They'd prefer Deutsche pull out of the US market and stock trading altogether.

In any case, Deutsche Bank has had a hard time turning things around. Mr. Hoops, who oversees institutional investors, is targeting a 10 percent revenue gain from these clients, and eventually similar gains from corporate clients. Louise Kitchen, the other co-chief of the investment banking division, is responsible for corporate clients.

One strategy is to provide advice not just about where markets are going but how customers can optimize their financial services. For instance, they could save money by having Deutsche handle their transactions directly, which brings added revenue to the bank in the form of commissions.

The investment bankers are also hoping to make up some ground from the fallout from a hard Brexit. Many companies won’t be able to relocate all their banking connections to the continent, meaning there will be more business for fewer banks.

Yasmin Osman covers banking for Handelsblatt in Frankfurt. Darrell Delamaide adapted this story into English for Handelsblatt Global. To contact the authors: [email protected].