Breaking News
Investing Pro 0
Cyber Monday Extended SALE: Up to 60% OFF InvestingPro+ CLAIM OFFER

Deutsche Bank warns of peril in borrowing from U.S. banks

Stock Markets Nov 25, 2022 05:15AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: The logo of Deutsche Bank is pictured on a company's office in London, Britain July 8, 2019. REUTERS/Simon Dawson/File Photo
 
C
+1.77%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
BAC
+2.30%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
GS
+1.30%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
JPM
+1.19%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
DBKGn
-0.86%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
MS
+2.18%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

By Tom Sims and Marta Orosz

FRANKFURT (Reuters) - Germany's Deutsche Bank (ETR:DBKGn) has a stark warning to European companies borrowing from U.S. lenders: They will drop you when times get tough.

The caution, spelled out in an interview with Deutsche Bank board member Fabrizio Campelli, is the latest escalation in a battle with U.S. banks for the business of European firms on its home turf.

It comes at a time that the corporate banking unit of Germany's largest lender is seeing a resurgence in the home stretch of an extensive restructuring.

"A number of European corporates are already realising the risks of not operating with companies that are long-term committed to the geographies ... in which they operate," he said, without citing any examples.

Campelli, who oversees Deutsche's corporate division as well as the investment bank that powered Deutsche through the overhaul, said U.S. banks "tend to flex lending up and down depending on circumstances".

"There was evidence of non-German banks in this country taking lending off the table while German banks were going longer-credit during the pandemic, in 2020," he added, again without citing examples.

Last year, five of the largest U.S. banks - JPMorgan (NYSE:JPM), Bank of America (NYSE:BAC), Morgan Stanley (NYSE:MS), Goldman Sachs (NYSE:GS) and Citigroup (NYSE:C) - captured a combined 35% share of the revenue for loans by German companies, up from 18% a decade earlier, data from Dealogic compiled for Reuters show.

Deutsche Bank Chief Executive Christian Sewing recently warned of the "danger" of European reliance on foreign banks, equating the threat to the region's dependence on outsiders for energy.

Deutsche Bank has long highlighted a need for Europe to have strong banks to vie with U.S. and Chinese competitors, but the latest rhetoric signals a more aggressive tone.

Campelli called for a "concerted approach" by politicians and regulators to support European banks.

TIDE IS TURNING

In 2019, Deutsche embarked on a revamp, promising to shift away from its volatile investment bank and towards its more staid businesses that serve corporations and individuals.

Having long struggled to deliver on that pledge, the tide, buoyed by rising interest rates, is turning. Higher borrowing costs are fattening profits from regular banking, although war, runaway prices and energy costs cloud the horizon.

"We're now getting there," said Campelli, who previously oversaw the overhaul. "Did we rely more on the investment bank during ... 2020-21 than we initially expected? Yes. We're starting to see a much more balanced earnings mix."

U.S. banks reject the criticism. JPMorgan, now one of the largest banks in Germany, says it is committed.

Stefan Behr, head of JPMorgan's operations in Europe, told Reuters he hasn't seen any pushback on its growth in Germany and noted that "many of the German banks work with us on deals as well as us being a banking partner to them."

"There's competition for every deal. And when they don't win it, I'm sure that they're not happy about it, just like we're not happy if we lose a mandate," Behr said.

Citigroup's head in Germany Stefan Hafke told Reuters that its client base in Germany is made up of "very long-term, sustainable relationships."

He said he wanted strong European banks in Germany and pushed back on being a mere U.S. bank. "We are operating on an equal footing with anyone else," he said.

Goldman, whose headcount in Germany has surged in recent years, declined to comment. Morgan Stanley did not immediately respond to a request for comment.

A spokesperson for Bank of America said Germany was critically important to its strategy, saying: "There is no pullback."

Deutsche Bank warns of peril in borrowing from U.S. banks
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email