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Deutsche Bank is banking on an aggressive hiring spree that has added more than 100 investment bankers in the past 18 months to boost revenues and reduce its reliance on bond trading.
Since the start of 2023, Germany’s largest lender has hired 125 investment bankers, including from Credit Suisse, 75 of them at director or director level. Deutsche’s purchase of British broker Numis, which was completed in October, added another 300 employees.
The decision to expand the ranks of its investment bankers marks a turnaround in Deutsche’s strategy since the financial crisis, a period in which the bank has largely scaled back operations to cut costs and grown other parts of the lender.
It also comes amid a growing recovery in global mergers and acquisitions after a prolonged drought. Deutsche ranked seventh in investment banking fees in the first quarter, up from 11th in all of 2023 and ninth in 2022, according to data provider Dealogic.
Fabrizio Campelli, head of Deutsche’s corporate and investment banking business, told the Financial Times that the lender was looking to offset its volatile and capital-intensive fixed income trading business by expanding its corporate finance advisory unit.
In addition to working on acquisitions, the firm advises companies on raising new debt and equity, as well as on initial public offerings.
“Our intention is not to become a top five global bank again, of all major companies – it’s more about strategically choosing our spots and winning there,” he said.
Campelli said the expanded recruitment had increased the number of “income-generating bankers” in its corporate finance advisory business by as much as 25 percent. He hopes the hire will lead to a similar increase in the investment bank’s advisory revenue over time.
“We expect to see a corresponding improvement in performance over time compared to pre-2023 levels,” he added.
While the investment bank’s performance has improved in recent years, the revival has been dependent on its bond trading activities. It has been a powerhouse for Deutsche, accounting for more than 80 percent of the investment bank’s revenue last year.
In 2023, the lender’s corporate finance and M&A bankers generated €1.25 billion in revenue. Although revenues rose 26 percent from 2022 levels, they still accounted for less than 5 percent of Deutsche’s total revenue in 2023.
Campelli, who has led Deutsche’s investment bank since 2021, says the investment in staff is already paying off. Revenues at the corporate finance advisory division rose 54 percent in the first quarter compared to the same period a year earlier.
Key hires at the bank over the past 18 months include Alison Harding-Jones, who joined from Citigroup as global head of M&A; former Lazard banker Ken Oliver Fritz, who is now Emea’s vice chairman of origination and advisory; and William Mansfield, head of M&A for Emea and previously at Credit Suisse.
The hires are part of a broader ambition that Deutsche set out last year to diversify the investment bank’s revenues away from bond trading.
Despite culling between 3 and 4 percent of the investment bank’s worst performers each year, the company now has 4,800 front-office staff, up from a low of 4,200 in the wake of a 2020 restructuring by CEO Christian Sewing.
“We’ve attracted talent from companies we wouldn’t have been able to attract five years ago, partly because the market was too tight and partly because the DB brand wasn’t where it is today six years ago,” said Mark Fedorcik, co-head of investment banking at Deutsche.
‘They want to come here now. They have seen the stock double in the last five years.”
The bank has also engaged senior dealmakers to advise financial institutions, consumer and financial groups, technology companies and healthcare companies. In addition, it hired leaders for its Asia Pacific and Latin America operations, as well as for its equity capital markets.
Fedorcik defended Deutsche’s £410 million takeover of Numis after the bank paid a 72 percent premium for the broker’s expansion in Britain. In February, Deutsche took a €233 million write-down on the company.
Although some staff have left Numis since the acquisition, Fedorcik said it has won more customers than it has lost, including Coca-Cola Europacific, Land Securities Group and Airtel Africa.
“The fee pool in the UK market has been mixed over the last three or four months,” Fedorcik said. “But this was a strategic acquisition focused on the long term over the next two to three years, and not the first few months.”