Deutsche Bank AG, Europe’s biggest lender by assets, expects revenues from its investment bank to remain “subdued” on lower global growth, according to one of the unit’s leaders.
While revenue from debt issuance will be “robust” and dealmaking will probably see a “modest” increase, income from selling new shares for clients won’t reach historical levels in the near future, Robert Rankin, co-head of the German lender’s investment bank, told analysts in Frankfurt today. Activity in some fixed-income markets will remain “strong,” while volumes in equity trading may gain in the “medium-term,” he said in a presentation.
Rankin and Colin Fan succeeded Anshu Jain as head of the investment bank when Jain became co-chief executive officer of the company at the beginning of June. The investment bank, which is at the forefront of Deutsche Bank’s efforts to raise capital, shed jobs and reduce costs, has been asked to “do more with less, differently,” Fan said in a presentation today.
“We will stand up humbly but resolutely for the role the investment bank plays in the economy,” said Rankin. The bank will continue to help governments and companies raise capital, fund trade, lower financing costs and advise on deals, he said.
Proprietary trading, where a bank makes bets with its own money, while “not necessarily a bad business if contained and well done,” is “not in tune with society” and will not be a part of Deutsche Bank’s business model, Fan said. The firm exited such business after 2008 financial crisis.
Deutsche Bank has said it’s cutting more than 1,900 jobs, with the investment bank and related infrastructure bearing the largest share of that total.
The company will adjust compensation in line with its profitability, Jain told analysts yesterday at the first day of Deutsche Bank’s strategy presentation.
While Deutsche Bank will offer “competitive” compensation, it will also be among the world’s best three investment banks in the future, helping the firm to win and retain employees, Rankin said.
“You need to take a three-year view of the industry at the moment, and people who take that view think they’ll be in good shape working for Deutsche bank in 2015,” said Rankin.