Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Deutsche Bank is targeting the Americas to boost its fixed income trading business, as part of a plan to expand its investment bank and rebuild its operations in the region.
Ram Nayak, who co-leads Deutsche’s investment bank, said the German lender could increase fixed income revenues by 20 per cent between 2023 and 2027 by “going after the hardest market in the world, which is the Americas”.
Although Deutsche is also attempting to build out the advisory arm of its investment bank to offset the volatility and capital intensiveness of fixed income, the debt side nonetheless dominates its investment banking revenues, accounting for more than 80 per cent of the total in 2023.
After slipping to a post-crisis low in 2019, the bank has rebuilt its core trading operations across rates, credit and emerging markets in recent years, boosting revenues in Europe and Asia. Revenue from the fixed income business climbed 45 per cent between 2019 and 2023 to €8bn.
Nayak, who runs the fixed income trading operation, told the Financial Times that while a push into the Americas had already borne fruit, the region still had the greatest growth potential for the business.
“We fixed Asia and we’re a top three player. We fixed Europe and we’re a top three player. It’s America where we’re lagging,” he said.
“Can I see 20 per cent [revenue] growth [in fixed income] from 2023 to say 2027? The answer is absolutely, and the biggest driver of that by far will be the Americas.”
Deutsche is ranked within the top three banks in fixed income in Europe and Asia, excluding listed derivatives and clearing, according to Coalition Greenwich, a data and benchmarking provider, which bases its figures on Deutsche’s internal revenues, product taxonomy and organisation structure. But it is only within the top eight in the Americas.
“The whole game for me is to take that dominant position [in fixed income] in Europe and Asia and replicate it in the US,” Nayak said. “I don’t need to reach a top three level in the US, there is an enormous gain in market share I can do by establishing myself as a clear top five franchise.”
The moves underline Deutsche’s renewed ambitions for its investment bank. Chief executive Christian Sewing engineered an overhaul of the unit after he took over in 2018, most notably by taking the axe to the German lender’s equity trading activities.
As part of efforts to win market share in fixed income, Deutsche has increased headcount at its business in the Americas — including the US — by more than 600 people over the past three years, one person familiar with the details said.
About half of those new hires joined at managing director or director level and the bank would continue to hire “selectively”, they said.
Additional reporting by Ortenca Aliaj in London
