Chief Christian Sewing set to leave indelible imprint on Deutsche Bank strategy
Revitalizing the Securities Business: Deutsche Bank's Quest for a New Era in Investment Banking
Seven years after Paul Achleitner, then-Chairman of the Supervisory Board, successfully ousted former CEO John Cryan, Christian Sewing has been steering Deutsche Bank towards a new phase. Sewing's mission: to revitalize the bank's securities business and rekindle its "hunter mentality." However, a recent extension of his contract until spring 2029 has led to mixed reviews, with shareholders expecting more growth.
The journey to this point began with the tenure of John Cryan, who, following the Josef Ackermann disaster, initiated cost-cutting measures. Sewing built upon these steps, scaling back investment banking due to regulatory requirements. Yet, this shift departed from the bank's fundamental identity as a securities house.
Alfred Herrhausen, Deutsche Bank's former CEO, articulated this identity in 1989, when he admitted, "What we admire and do not possess is the Anglo-Saxon culture in the finance money business." This prompted the bank's entry into global investment banking—a move that was later reversed in 2018. Marcus Schenck, then-head of investment banking, believed Deutsche Bank was the only European bank with the potential to remain a world-leading investment bank.
Today, the bank no longer holds that title, but a "sum-of-the-parts" analysis suggests that only the securities business offers the institution a chance at excellence. German retail banking holds no glory, while corporate banking, despite being an important pillar, offers limited growth opportunities.
To regain its former glory, Deutsche Bank should expand its securities business, a piece of advice echoed by Oliver Behrens, the president of Frankfurt Main Finance. Only a robust securities business can bridge the gap with foreign banks, acting as the lever Deutsche Bank needs to grow. Today, investment banking accounts for around one-third of the bank's revenues but contributes nearly two-thirds of its pre-tax profit.
To seize growth opportunities, Deutsche Bank should explore mergers and acquisitions, especially within its subsidiary DWS. Recent comments from DWS CEO Stefan Hoops indicate that acquisition opportunities may arise. Such a move would be a first M&A building block toward fulfilling the bank's "hunter mentality" claim.
In recent years, Deutsche Bank has made strides through its Global Hausbank strategy, capital strengthening, share buybacks, and setting ambitious targets for 2025. However, to truly revitalize its securities business and assert its position as a leading investment bank, the bank must tackle additional challenges, including enhancing risk management, diversifying investment banking capabilities, embracing digital transformation, maintaining regulatory compliance, and strengthening client relationships.
While geopolitical uncertainties and ambitious financial targets pose significant challenges, strategic management and decisive action can help Deutsche Bank achieve its goal. The future of the bank lies in its ability to navigate these challenges and seize opportunities for growth in the securities business.
With the extended tenure of Christian Sewing as CEO, Deutsche Bank is expected to further improve its securities business, a key sector for potential growth and excellence, as suggested by Oliver Behrens, the president of Frankfurt Main Finance. To strengthen its position in global investment banking, Deutsche Bank should consider mergers and acquisitions, particularly within its subsidiary DWS, to support its mission of revitalization and adoption of a "hunter mentality."
