Deutsche Bank: COVID-19 disruption no threat to ASL growth plans
08 April 2020 New York
Image: Shutterstock
Deutsche Bank’s global securities lending chief has rebuffed concerns that the bank’s latest troubles, brought on by the COVID-19 pandemic, will disrupt her plans to build out its agency lending business (ASL).
Since the pandemic threw global business into disarray earlier this year, questions have been raised about the German bank’s ability to maintain its trajectory for reform and capture new business.
Deutsche Bank has been battling to improve its corporate businesses in recent years following a string of costly run-ins with regulators and a series of high-profile departures.
Until recently, things appeared to be on track.
The ink was dry on its deal to sell-off its prime brokerage business to BNP Paribas, there was a newly-installed global head of ASL with a clear vision for the future, and several other reforms in areas such as know-your-customer processes were well underway to appease regulators.
In addressing Deutsche Bank’s “sizeable loss for 2019” in its annual report in late January, the bank’s CEO, Christian Sewing, said he was expecting the €5.3 billion full-year net loss, but that “progress comes at a price”.
Sewing described how the bank had made “major strides” in implementing “the most radical transformation of Deutsche Bank for two decades”.
He went on to argue that, despite the high volume of senior staff departures and the sell-off of whole business segments, Deutsche Bank was committed to not just defending its market position but building it.
But, that was January.
As COVID-19 took hold across the world, it quickly became apparent that many businesses’ plans for the year were facing major disruption, and the naysayers that had dogged Deutsche Bank on its redemption journey were quick to cast fresh doubt on the bank’s future.
Media reports claimed Deutsche Bank’s overhaul had been “derailed” by the virus and, worse still, the gains its share price had made following Sewing’s bullish assessment evaporated.
Amid the coronavirus-fuelled global market sell-off, Deutsche Bank’s share price fell from highs of €10.2 in mid-February to a low of €4.9 a month later. It has since made modest gains but remains well below H2 2019 levels.
In response to recent events Rebekah Flohr, global head of ASL, tells SLT that “everything is on track” with her plans and vision for the combined Securities Services and ASL offering.
“Even if we’re having to do it under a split operations model which means some of our staff are remote,” Flohr adds. “We, and more importantly some of our clients, are already benefitting from having the products and our coverage team more closely aligned.”
Speaking to SLT in February shortly after assuming her new role, Flohr outlined plans to bring the bank’s ASL business more in line with the rest of its Securities Services activates in order to benefit from shared resources and knowledge.
“We are also focused on accessing new technology resources and have made some engineering hires. The aim is to take the core system that has been servicing our client base for a long time and make that less burdensome on us and them,” she said at the time.
Flohr also revealed ambitions to push Deutsche Bank’s Securities Service business, including ASL, further into emerging markets.
Now, in order to maintain the forward momentum Deutsche Bank gained earlier in the year, Flohr says: “We are all hands on the pump to support clients, particularly those who use the repo markets.”
“In many ways, the crisis is exemplifying the operational resilience and strength of a robust platform that comes into its own at a time like this,” she explains. “There is no doubt that we are facing unprecedented times resulting in market turbulence, but we are using the full force of our experience across trading, operations and risk management to continue to deliver for our clients in a risk-controlled fashion.”
Since the pandemic threw global business into disarray earlier this year, questions have been raised about the German bank’s ability to maintain its trajectory for reform and capture new business.
Deutsche Bank has been battling to improve its corporate businesses in recent years following a string of costly run-ins with regulators and a series of high-profile departures.
Until recently, things appeared to be on track.
The ink was dry on its deal to sell-off its prime brokerage business to BNP Paribas, there was a newly-installed global head of ASL with a clear vision for the future, and several other reforms in areas such as know-your-customer processes were well underway to appease regulators.
In addressing Deutsche Bank’s “sizeable loss for 2019” in its annual report in late January, the bank’s CEO, Christian Sewing, said he was expecting the €5.3 billion full-year net loss, but that “progress comes at a price”.
Sewing described how the bank had made “major strides” in implementing “the most radical transformation of Deutsche Bank for two decades”.
He went on to argue that, despite the high volume of senior staff departures and the sell-off of whole business segments, Deutsche Bank was committed to not just defending its market position but building it.
But, that was January.
As COVID-19 took hold across the world, it quickly became apparent that many businesses’ plans for the year were facing major disruption, and the naysayers that had dogged Deutsche Bank on its redemption journey were quick to cast fresh doubt on the bank’s future.
Media reports claimed Deutsche Bank’s overhaul had been “derailed” by the virus and, worse still, the gains its share price had made following Sewing’s bullish assessment evaporated.
Amid the coronavirus-fuelled global market sell-off, Deutsche Bank’s share price fell from highs of €10.2 in mid-February to a low of €4.9 a month later. It has since made modest gains but remains well below H2 2019 levels.
In response to recent events Rebekah Flohr, global head of ASL, tells SLT that “everything is on track” with her plans and vision for the combined Securities Services and ASL offering.
“Even if we’re having to do it under a split operations model which means some of our staff are remote,” Flohr adds. “We, and more importantly some of our clients, are already benefitting from having the products and our coverage team more closely aligned.”
Speaking to SLT in February shortly after assuming her new role, Flohr outlined plans to bring the bank’s ASL business more in line with the rest of its Securities Services activates in order to benefit from shared resources and knowledge.
“We are also focused on accessing new technology resources and have made some engineering hires. The aim is to take the core system that has been servicing our client base for a long time and make that less burdensome on us and them,” she said at the time.
Flohr also revealed ambitions to push Deutsche Bank’s Securities Service business, including ASL, further into emerging markets.
Now, in order to maintain the forward momentum Deutsche Bank gained earlier in the year, Flohr says: “We are all hands on the pump to support clients, particularly those who use the repo markets.”
“In many ways, the crisis is exemplifying the operational resilience and strength of a robust platform that comes into its own at a time like this,” she explains. “There is no doubt that we are facing unprecedented times resulting in market turbulence, but we are using the full force of our experience across trading, operations and risk management to continue to deliver for our clients in a risk-controlled fashion.”
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