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Deutsche Bank is banking on an aggressive hiring drive, including adding more than 100 investment bankers in the past 18 months, to boost revenue and reduce its reliance on bond trading.
Germany’s largest bank is hiring 125 investment bankers, including hires from Credit Suisse, with 75 of them joining at managing director or director level, from the start of 2023. Deutsche Bank’s acquisition of British brokerage Numis, which was completed in October, added a further 300 staff.
The decision to add to its investment banking staff marks a shift in strategy Deutsche Bank has taken since the financial crisis, when it sharply scaled back some parts of its business to cut costs and expand other parts of its lending.
It also comes as global mergers and acquisitions are recovering sharply after a long period of weakness.Deutsche Bank ranked seventh in investment banking fees for the first quarter, up from 11th for the full year 2023 and ninth in 2022, according to data provider Dealogic.
Fabrizio Campelli, head of corporate and investment banking at Deutsche Bank, told the Financial Times that the bank is looking to offset its volatile and capital-intensive bond trading business with an expansion of its corporate finance advisory division.
In addition to its acquisition work, the firm also advises companies on raising new debt and equity, as well as initial public offerings.
“We are not looking to get back into the top five banks in the world among all the bulge bracket firms. It’s more about strategically picking our positions and winning there,” he said.
Campelli said the major hiring drive has increased the number of “revenue-generating bankers” in the firm’s corporate finance advisory business by as much as 25 percent, and he hopes the drive will lead to a similar increase in investment banking advisory revenue.
“We expect performance to improve commensurately over time compared to pre-2023 levels,” he added.
The investment bank’s performance has improved in recent years, but that strength has depended on its bond-trading business, Deutsche Bank’s breadth and breadth, which accounted for more than 80% of the bank’s revenue last year.
The bank’s corporate finance and M&A bankers generated revenue of €1.25 billion in 2023. Revenues were up 26% from 2022 but still accounted for less than 5% of Deutsche Bank’s total revenue in 2023.
Campelli, who will head Deutsche Bank’s investment banking from 2021, said the investments in talent are already paying off: Revenue from the bank’s corporate finance advisory division grew 54% in the first quarter compared to the same period last year.
The bank’s key hires in the past 18 months include Alison Harding-Jones, who joined from Citigroup as global head of M&A, Ken Oliver-Fritz, a former Lazard banker who is now vice chairman of origination and advisory for EMEA, and William Mansfield, head of M&A for EMEA, previously at Credit Suisse.
The hire is part of a broader effort Deutsche Bank launched last year aimed at diversifying its investment banking revenue away from bond trading.
Even as the investment bank cuts 3% to 4% of its worst-performing employees each year, its front-office headcount has grown to 4,800 today from a low of 4,200 after a restructuring under Chief Executive Officer Christian Sewing in 2020.
“The market was tight and Deutsche Bank’s brand six years ago was not what it is today, so we attracted talent from companies we couldn’t have attracted five years ago,” said Mark Fedorcik, co-head of investment banking at Deutsche Bank.
“They want to come here now. They’ve seen the stock price double in the last five years.”
The bank also hired senior dealmakers to advise financial institutions, consumer and finance groups, technology companies and the healthcare business, as well as leaders for its Asia Pacific and Latin American operations, and equity capital markets.
Mr Fedorsik defended Deutsche Bank’s £410 million acquisition of Numis after paying a 72 percent premium for the bank to expand in the U.K. In February, Deutsche Bank took a 233 million euro impairment charge on the business.
While some staff have left Numis since the acquisition, Fedorsik said it has gained more clients than it has lost, citing Coca-Cola Europacific, Land Securities Group and Airtel Africa as examples.
“Fee pools in the UK market have been mixed over the last three to four months,” Fedorsik said, “but this was a strategic acquisition focused on the long term, over the next two to three years, not just the first few months.”
