Deutsche Bank is making a fresh play to grab a bigger share of the UK dealmaking market amid a broader investment bank expansion at the German lender.
Daniel Ross, who took the helm of Deutsche’s UK investment bank in August after a 12-year stint at Barclays, told Financial News that it will continue to beef up its team of dealmakers, particularly as it bids to gain more M&A and equity advisory work.
“We’ve certainly been underweight in terms of the number of people in our UK business relative to our peers,” he said. “We will continue to build the team. We want to get to a position where the team has real critical mass in the UK, as well as across the firm more broadly.”
Germany’s biggest bank has made a series of key hires in recent months for its UK business, amid a broader renewed expansion of its origination and advisory unit globally that has brought in around 30 directors and managing directors this year.
Derek Shakespeare, the former head of UK M&A at Barclays, was poached by the German lender in October, just three months after his promotion to chairman of UK M&A at the bank. While Shakespeare will join Deutsche as chairman of M&A for Europe, the Middle East and Africa, Ross said he has the “gravitas” in UK boardrooms that will help the German lender win more deals.
Meanwhile, former BNP Paribas corporate broking co-head, Lewis Burnett, joined Deutsche in September and more senior recruits are expected. It has also hired managing directors Abid Chaudhri, Ed McBride and Oliver Ives in recent months.
The UK is the biggest market for investment banks in Emea, typically comprising up to 30% of overall revenues in the region, and is key to gaining market share.
At Deutsche, Germany is its biggest market — it has made $246m in fees there so far this year, according to data provider Dealogic, or 31% of its Emea investment banking revenues. The UK makes up around 16%, the numbers show, or $125m.
Deutsche was once the dominant force in European investment banking until it was knocked from the top spot by JPMorgan in 2014. The German lender’s radical transformation unveiled in July 2019, which will eventually see 18,000 jobs lost, has meant a focus on core business lines including debt capital markets. It currently ranks eighth in Emea by investment banking revenues, according to Dealogic.
Ross declined to comment on its league table ambitions in the UK, but the bank ranked 10th by fees in the first nine months of this year, according to Dealogic.
The UK market is increasingly competitive as deal activity has surged this year, and has become a bigger focus for a number of Deutsche’s rivals. Citigroup is expanding its UK and Ireland investment bank under new bosses James Fleming and Jan Skarbek, who were appointed in June and are aiming for a top-three spot in the league tables.
Goldman Sachs also named new UK investment banking leaders in November last year, while JPMorgan has hired Linklaters senior partner Charlie Jacobs as co-head of its UK investment banking business. HSBC, which is expanding its investment banking business in the UK, has named Sarah Wiggins as a vice chair in a fresh push to gain more C-suite relationships in the country.
Ross said that he is looking to draw on his “old school” banking background to help Deutsche gain greater traction in UK boardrooms. He started his banking career at Schroders in the 1990s, until its investment bank was acquired by Citigroup in 2000, and went on to work for Morgan Stanley.
“That old school investment banking approach of how we deal with clients is first and foremost what we’re trying to do,” said Ross. “I think that’s been lost a bit in recent years as the market has become more product and deal-oriented. The days of having retained clients and not being driven by transactional revenues have gone, but within the bounds of what is possible, we want to recreate that old-style banking mentality.”
Despite job cuts in its investment bank over the past two years, the unit has become increasingly central to a pick up in performance at Deutsche Bank. It accounted for around 40% of overall revenues in the first nine months of the year, and frontline headcount in the unit has ticked up by 4% to 4,325 over the past year.
Its chief financial officer, James von Moltke, told reporters during its third quarter earnings call that it is looking to add bankers in healthcare, technology and M&A.
Ross admits that the current hiring market is a challenge. “Every banker is getting multiple offers currently, and the people we’ve hired are certainly no exception,” he said.
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