Deutsche Bank is clearly planning to wind down its leveraged loan business. As the Bloomberg news agency writes, in the future there will be less capital and staff available for lending business with heavily indebted companies. Resources can move to other areas such as the consulting business. Deutsche Bank declined to comment on the Finance report.
Deutsche Bank reviews underperforming companies
According to the report, the planned cuts are the result of an analysis of underperforming business areas initiated by Deutsche Bank chief Christian Swing. Deutsche Bank reportedly started this analysis about three years ago. Over the past year, Deutsche Bank’s leveraged finance business in the US has declined by about 80 percent, according to Bloomberg. It is part of the underwriting and advisory business.
This is under pressure this year due to rising inflation and rising geopolitical tensions. Income in this area fell by 85 percent to 95 million euros in the third quarter. many Corporate banking Hesitate to new deals. According to Bloomberg data, Deutsche Bank is only 38th in the world merger and acquisitionBusiness after continuous ranking in the top ten in the past.
According to the report, Deutsche Bank has already held several positions in the issuance of and Consulting business drop. More job cuts could follow. According to Bloomberg, Deutsche Bank expects an increase in advisory business in the coming year, particularly in transactions in the technology and healthcare sectors.
The European Central Bank is calling for more equity to secure leveraged loans
It is unclear how much of a role tighter capital requirements will play into potential cuts in leveraged loan business announced by the European Central Bank in October. Bank supervisors had already imposed a capital surcharge on Deutsche Bank for its leveraged loan business last year after the bank refused to constrain the business despite requests. In the past, this has been said to have been one of the main sources of income in investment banking for Blue Bank – although the Frankfurt-based company spins a relatively small wheel in the leveraged finance market.
According to the current medium monitor of investment bank Houlihan Lockey, Bayt Al Mal funded just three transactions in the first nine months of this year, including Triton’s acquisition of luxury kitchen sink manufacturer Schock and its addition from Genui. This puts the bank in the middle of the pack in the LBO business. For comparison: this year’s major banks in the sector Unicredit, LBBW and Commerzbank financed more than a dozen transactions by the end of the third quarter.
Just a few days ago, Swing criticized the European Central Bank’s tough stance on leveraged loans and criticized the fact that European banks were at a disadvantage compared to their US competitors.
Falke Sens, editor at Finance. He studied sociology, political science, modern and medieval history in Frankfurt am Main and journalism in Mainz. Prior to joining the Finance Department, Falk Sens worked for three years as editor of the Versicherungswirtschaft and for ten years in various media outlets of the Universum Verlag.