December 3, 2023

Investment Banking

Let Your Investment Banking Do The Walking

Deutsche Bank on M&A Hiring Spree as Deal Drought Lowers Costs

(Bloomberg) — Deutsche Bank AG sees the current slump in mergers and acquisitions as an opening to boost ranks and take back some market share from Wall Street rivals.

The German giant has signed on M&A veterans from peers including Bank of America Corp., Credit Suisse Group AG, Lazard Ltd. and Citigroup Inc. over the past couple of months and wants to continue hiring more, said Fabrizio Campelli, who oversees the investment bank and the commercial banking division. 

“We have hired close to 50 industry coverage deal makers and product experts since the start of the year to target growth in strategic revenues as the market rebounds for deal activity,” Campelli said in an interview. “To support this we are making investments in technology, selective hiring and additional growth initiatives” in those parts of the investment bank that tie up little capital such as M&A advisory, he said.

As part of the drive, the Frankfurt-based bank last month agreed to buy Numis Corp., a City boutique ranked third in advising on UK IPOs over the past five years, even as it revealed plans to cut 800 senior back-office workers to reduce costs.

The lender’s M&A push comes against the backdrop of sweeping job cuts at competitors weathering a massive slump in deals. Goldman Sachs Group Inc. and Morgan Stanley are among those eliminating thousands of jobs they added during the boom in 2021. Many of the reductions are across dealmaking units. Over in Europe, the demise of Credit Suisse has prompted an exodus of investment bankers.

The big question now is just how quickly deal activity will start to rebound. Global deal volume has declined about 46% this year-to-date and there’s little sign that the trend will reverse soon.  

Deutsche Bank is also starting from a low place. While European banks have always lagged behind the five biggest Wall Street banks in M&A rankings, the German lender has performed even worse and it hasn’t clinched a place among the top 10 global dealmakers since 2017, according to Bloomberg’s league tables.

Deutsche Bank didn’t beef up its investment banking units as much as many Wall Street peers did during the boom two years ago, partly because it was simply unable to keep up with the enormous pay packages offered at the time, people familiar with the matter said. While that meant it was sometimes understaffed during that period, it’s now proving to be an advantage as it can pick up executives at better prices, the people said. 

Among the senior bankers Deutsche Bank has hired are Siddharth Malik, Carrie Barber, William Mansfield, Ken Oliver Fritz, Freya van Oorsouw and Jeff Cady, the people said.

Read More: Deutsche Bank Aims to Pick Up Credit Suisse Clients Amid Merger

Other banks, including some who’ve never been anywhere near the league tables, are also jumping in as the cost of acquiring talent plunges. Banco Santander SA is seeking to poach dozens of Credit Suisse bankers with a focus on US, Bloomberg News reported earlier this week. Moelis & Co. Chief Executive Officer Ken Moelis last week also said he sees “a great opportunity to build the company in this downturn.” 

Deutsche Bank Chief Executive Officer Christian Sewing has previously said he will continue to invest in parts of the investment bank that tend to generate fee income such as providing advice on M&A and initial public offerings and tie up much less capital than lending activities. By comparison, the lender has been shrinking its leveraged finance unit, which also sits in the advisory and underwriting unit known as Origination & Advisory, but tends to consume more capital than the other parts of O&A. 

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