Deutsche Bank is having an investor day. CEO Christian Sewing says the German bank wants to be “the European alternative in global banking and the gateway to Europe for clients around the world”. There are some big plans.
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In its investment banking division, Deutsche Bank wants to increase revenues at a compound annual growth rate (CAGR) of more than 15% a year between now and 2028. In its fixed income sales and trading business, it wants to grow revenues at a CAGR of 3% over the same period.
As it pumps its revenues, Deutsche Bank might need to hire some new people. Today’s investment bank-specific presentation, from head of the investment bank Fabrizio Campelli, talks about investing across “industrials, FIG, healthcare and tech,” implying new bankers to cover these verticals. In fixed income sales and trading, Campelli says the bank wants to “close competitive gaps” in areas like US flow credit trading and US securitized products. In technology, Campelli says Deutsche’s investment bank wants to “invest in tech talent and capability,” which suggests hiring there, too.
As Deutsche Bank’s investment bank expands, it may not be splashing around the sorts of guaranteed bonuses that it has been known for in the past. Today’s presentation from Campelli explains that the bank wants costs to consume just 30% of marginal revenues in the investment bank between now and 2028. Across the investment bank as a whole, costs are expected to consume 58% of revenues this year. The aspiration is therefore for future revenues in the investment bank to come at half the cost of current ones.
How will this happen? It’s all about a “scalable operating model,” says Campelli. There will be “tech led innovative solutions.” There will be, “AI-enabled front-to-back automation and end-to-end process re-design.” Most tellingly, there will also be “100% AI enabled engineers.”
It sounds very ambitious. Deutsche Bank’s share price is currently down nearly 1.7% today.
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