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Deutsche Bank
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Deutsche Bank AG (literally "German Bank"; ; , ) is an international Universal bank with a broad private clients franchise, headquartered in Frankfurt, Germany. The bank employs more than 81,000 people in 76 countries, and has a large presence in Europe, the Americas, Asia Pacific and the emerging markets.
Deutsche Bank has offices in finance-hubs, including London, Moscow, New York, Singapore, Sydney, Hong Kong and Tokyo. Furthermore, the bank is investing in expanding markets such as the Middle East, Latin America, Central & Eastern Europe and Asia Pacific.
The bank offers financial products and services for corporate and institutional clients along with private and business clients.
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Encyclopedia
Deutsche Bank AG (literally "German Bank"; ; , ) is an international Universal bank with a broad private clients franchise, headquartered in Frankfurt, Germany. The bank employs more than 81,000 people in 76 countries, and has a large presence in Europe, the Americas, Asia Pacific and the emerging markets.
Deutsche Bank has offices in finance-hubs, including London, Moscow, New York, Singapore, Sydney, Hong Kong and Tokyo. Furthermore, the bank is investing in expanding markets such as the Middle East, Latin America, Central & Eastern Europe and Asia Pacific.
The bank offers financial products and services for corporate and institutional clients along with private and business clients. Services include sales, trading and origination of debt and equity, mergers and acquisitions ((M&A), risk management products such as derivatives, corporate finance, wealth management, retail banking, fund management and transaction banking.
Deutsche Bank’s Chief Executive Officer and Chairman of the Group Executive Committee, since 2002, is Josef Ackermann. Deutsche Bank is listed on both the Frankfurt (FWB) and New York stock exchanges (NYSE).
History
Deutsche Bank was founded in Germany in January 1870 as a specialist bank for foreign trade in Berlin. Its first branches, inaugurated in 1871 and 1872 were opened in Bremen, Hamburg, Frankfurt, Leipzig and Dresden.
The Bank’s first foray overseas came shortly afterwards, in Shanghai (1872) and London (1873). Already, at this early stage, the bank was looking further afield, making investments in North and South America, Asia and Turkey.
Furthermore, major projects in the early years of the bank included the Northern Pacific Railroad in the US and the Baghdad Railway (1888). In Germany, the bank was instrumental in the financing bond offerings of steel company Krupp (1885) and introduced the chemical company and Zyklon B manufacturer Bayer to the Berlin stock market.
The bank merged with other local banks in 1929 to create Deutsche Bank und DiscontoGesellschaft, at that point the biggest ever merger in German banking history. In 1937, the company name changed back to Deutsche Bank.
After Adolf Hitler came to power, instituting the Third Reich, Deutsche Bank dismissed its three Jewish board members in 1933. In subsequent years Deutsche Bank took part in the aryanization of Jewish-owned businesses: according to its own historians, the bank was involved in 363 such confiscations by November 1938. During the war, Deutsche Bank incorporated other banks that fell into German hands during the occupation of Eastern Europe. Deutsche provided banking facilities for the Gestapo and loaned the funds used to build the Auschwitz camp and the nearby IG Farben facilities. Deutsche Bank revealed its involvement in Auschwitz in February 1999. In December 1999 Deutsche, along with other major German companies, contributed to a $5.2 billion compensation fund following lawsuits brought by Holocaust survivors. The history of Deutsche Bank during the Second World War has been documented by independent historians commissioned by the Bank.
During World War II, Deutsche Bank became responsible for managing the Bohemian Union Bank in Prague, with branches in the Protectorate and in Slovakia, the Bankverein in Yugoslavia (which has now been divided into two financial corporations, one in Serbia and one in Croatia), the Albert de Barry Bank in Amsterdam, the National Bank of Greece in Athens, the Oesterreichische Creditanstalt-Bankverein in Austria and Hungary, the Deutsch-Bulgarische Kreditbank in Bulgaria, and Banca Commercial Romana in Bucharest. It also maintained a branch in Istanbul, Turkey.
Following Germany's defeat in World War II, the Allied authorities, in 1948, ordered Deutsche Bank's break-up into ten regional banks. These 10 regional banks were later consolidated into three major banks in 1952: Norddeutsche Bank AG; Süddeutsche Bank AG; and Rheinisch-Westfälische Bank AG.
In 1957, these three banks merged to form Deutsche Bank AG with its headquarters in Frankfurt. Two years later, the bank entered retail banking by introducing small personal loans. In the 1970s, the bank pushed ahead with international expansion, opening new offices in new locations such as Milan (1977), Moscow, London, Paris and Tokyo. In In the 1980s, this continued when the bank paid US$603 million in 1986 to acquire Banca d’America e d’Italia, the Italian subsidiary that Bank of America had established in 1922 when it acquired Banca dell'Italia Meridionale. The acquisition represented the first time Deutsche Bank had acquired a sizeable branch network in another European country.
In 1989, the first steps towards creating a significant investment banking presence were taken with the acquisition of Morgan Grenfell, a UK-based investment bank. By the mid-1990s, the build up of a capital markets operation had got under way with the arrival of a number of high-profile figures from major competitors. Ten years after the acquisition of Morgan Grenfell, the U.S. firm, Bankers Trust, was added.
Deutsche continued to build up its presence in Italy with the acquisition in 1993 of Banca Popolare di Lecco from Banca Popolare di Novara for about US$476 million.
In 2001, Deutsche Bank was listed on the New York Stock Exchange (NYSE). The following year, Deutsche Bank strengthened its U.S. presence when it purchased Scudder Investments. Meanwhile, in Europe, Deutsche Bank increased its private banking business by acquiring Rued Blass & Cie (2002) and Russian investment bank United Financial Group (2006). In Germany, further acquisitions of Noris Bank and Berliner Bank strengthened Deutsche Bank’s retail offering in its home market. This series of acquisitions was closely aligned with the bank’s strategy of bolt-on acquisitions in preference to so-called “transformational” mergers. These formed part of an overall growth strategy that also targeted a sustainable 25% return on equity, something the bank achieved in 2005.
Performance
| Year | 2008 | 2007 | 2006 | 2005 | 2004 | 2003 |
|---|
Net Income | €-3.9bn | €6.5bn | €6.1bn | €3.5bn | €2.5bn | €1.4bn | Revenues | €13.5bn | €30.7bn | €28.5bn | €25.6bn | €21.9bn | €21.3bn | Return on Equity | -29% | 29% | 30% | 26% | 16% | 1% | Dividend | 0.5 | 4.5 | 4.0 | 2.5 | 1.7 | 1.5 |
Deutsche Bank has been transformed over the past five years, moving from a German-centric organisation that was renowned for its retail and commercial presence to a global investment bank that is less reliant on its traditional markets for its profitability.
The bank has been widely recognised for its progress and was named IFR Bank of the Year twice in a three year period, in 2003 and 2005.
For the 2008 financial year, Deutsche Bank reported its first annual loss in five decades.
Management Structure
Until recently, there was no CEO at Deutsche Bank. The board was represented by a “speaker of the board.” Today, Deutsche Bank has a Management Board whose members are: Josef Ackermann (Chairman and CEO); Hugo Bänziger (Chief Risk Officer); Anthony Di Iorio (Chief Financial Officer); Hermann-Josef Lamberti (Chief Operating Officer) and Stefan Krause.
The Group Executive Committee is the Management Board plus the heads of the bank’s business areas, namely: Michael Cohrs (Global Banking); Anshu Jain (Global Markets); Jürgen Fitschen (Regional Management); Rainer Neske (Private & Business Clients); Kevin Parker (Asset Management); and Pierre de Weck (Private Wealth Management).
The Supervisory Board of the bank is chaired by Clemens Börsig.
Business Structure
Deutsche Bank’s mission statement is: “We compete to be the leading global provider of financial solutions for demanding clients creating exceptional value for our shareholders and people.” The bank’s business model rests on two pillars: the Corporate & Investment Bank (CIB) and Private Clients & Asset Management.
Deutsche Bank owns Abbey Life, a large UK pension and assurance company. The company acquired this closed life book in June 2007. Abbey Life has no functioning website, and its purported website www.abbeylife.co.uk has not functioned for many months. Abbey Life's internet activities can be confused with www.abbey.com, an unrelated functioning website owned by Abbey, a UK banking subsidiary of Banco di Santander. Abbey Life pension fund holders have little of the up to date information on the funds and their management needed to protect their interests under current conditions. Abbey Life sold many pension policies in the 1980s, but are now closed to new business. Firms such as Standard Life and Norwich Union scrapped exit penalties for all policies - old and new - in 2001.
Those with Abbey Life pensions are locked into poorly performing funds with very high management charges, and high exit costs David Pitt-Watson, founder of Hermes Equity criticised high pension charges in the UK by comparison with Europe, and called for a reduction in fees, which amount to 40% of the money invested over 25 years assuming an annual charge of 1.5%.
The £2 billion Abbey Life Equity fund returned 60% over 10 years, just over half the return on the un-managed FTSE All Share Index. Abbey Life pensions have been the subject of widespread criticism in the UK press and media, and in November 2008 Abbey Life was instructed by the the FSA to remove unfair contract terms from material in its Retirement Pack. In Summer 2008, Money Marketing reported that Independent Financial Advisers were concerned about Abbey Life's practice of automatically vesting clients pensions into its own annuity without their consent. One adviser reported that a plan had been vested on the worst possible terms, with no tax-free cash, no widow's option and the pension paid annually in arrears.
CIB
In little over a decade, Deutsche Bank’s CIB has established itself as one of the world’s leading investment banking houses. CIB comprises the bank’s market-leading Global Markets and Global Banking Divisions.
Until recently, Global Markets contributed a major slice of Deutsche Bank’s profitability and revenues. The business is responsible for sales and trading of debt and equity, derivatives and other innovative products. Global Markets’ prowess in bond markets, foreign exchange and derivatives has brought many awards and accolades over the past five years.
However, from 2004/5 Deutsche Bank embarked on a programme of cost reduction, initially axing 6,400 jobs in London, Frankfurt and elsewhere.. In November 2008, acting in response to the credit crisis, the Bank announced a further staff reduction axeing 1 in 7 of its traders, a loss of 900 jobs, mainly in London and New York.
Global Banking comprises a major Merger & Acquisitions (M&A) practice that has grown significantly over the past five years. In 2007, the bank’s M&A business, in competition with banks and institutions with long-standing and well established M&A reputations, made further strides in building a world-class franchise. Global Banking also includes a global capital markets business that has a significant and innovative presence in the European initial public offering , equity, debt and high yield markets. Coverage of clients is also housed in Global Banking.
Global Transaction Banking, which forms part of Global Banking, deals with cash management, clearing, trade finance and trust & securities services. This business has grown five fold in recent years and it now an industry leader. Deutsche Bank has won numerous awards for the quality of its transaction banking service especially in the area of cash management. It is now one of the largest divisions of the Bank by ranked by IBIT.
CIB’s clients are mainly private and public sector institutions, including sovereign states, supranational bodies, global and multinational companies and medium-sized and small businesses.
PCAM
Private Clients & Asset Management (PCAM) is composed of Private Wealth Management, Private & Business Clients and Asset Management. This trio of business divisions include Deutsche Bank’s investment management business for private and institutional clients, together with retail banking activities for private clients and small and medium-sized businesses.
Private Wealth Management
Private Wealth Management is the bank’s private banking arm, serving high net worth individuals and families worldwide. The division has a strong presence in the world's private banking hotspots, including Switzerland, Luxembourg, the Channel Islands, the Caymans and Dubai.
Private & Business Clients
Private & Business Clients is Deutsche Bank’s retail network which has grown significantly over the past few years, expanding in Italy, Spain and Poland as well as the bank’s home market of Germany. In the past two years, expansion has also taken place in emerging markets such as India and China. Asset Management manifests itself in a number of ways at Deutsche Bank. In Germany, DWS Investments is an award-winning a highly respected mutual fund manager with around €270bn under management. In the U.S. and Europe, RREEF Alternative Investments, the global alternative investment management arm of Deutsche Bank, had more than €60bn of assets under management as at the end of 2007.
Communication
Early understanding of modern communication tools has contributed to create the international recognition Deutsche Bank enjoys today. In 1972 the bank created the world known blue logo "Slash in a Square" designed by Anton Stankowski and intended to represent growth within a risk-controlled framework. Deutsche Bank owns the two-letter-domain db.com since September 1997. Deutsche Bank is now one of the few large corporations worldwide and the only bank in Germany to own a two letter ".com" domain name.
Acquisitions
- Morgan, Grenfell & Company, 1990.
- Bankers Trust (Successfully Closed) 30 November 1998.
- Scudder Investments, 2001
- Berkshire Mortgage Finance October 22, 2004.
- Chapel Funding, now DB Home Lending September 12 2006
- MortgageIT Holdings January 3, 2007
Notable current and former employees
Public service
See also
External links
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