Deutsche Bank Overhauls Fixed Income Sales in Ongoing Cost Drive
2021-05-12 16:14:57.403 GMT
By William Shaw and Steven Arons
(Bloomberg) — Deutsche Bank AG is rearranging how it sells
fixed-income trading products as it seeks to lower costs while
avoiding falling revenue at the company’s biggest source of
income.
The new model will divide the coverage team into two
groups, one focusing on flow and liquidity and another on client
solutions. That’s in an effort to provide purely electronic
offerings to one set of clients, and more advanced — and more
expensive ones — to another.
The bank will pilot the new structure among its team for
European rates and credit flow products in an effort to
“dynamically manage the firm’s client perimeter,” according to a
press release on Wednesday. Around 80 staff will be affected,
the unit’s managing director, Mark Tiernan, said in an
interview.
Though the aim of the project is to “reduce the cost of
trading,” the lender isn’t currently planning any job cuts as a
result of it, Tiernan said.
Deutsche Bank under Chief Executive Officer Christian
Sewing has been beefing up its credit business as it seeks to
benefit from a global trading boom that has led to soaring
revenue in its securities unit. Income from buying and selling
debt securities rose 34% in the first three months of the year,
compared with an average 17% gain for the largest U.S.
investment banks, and credit trading performed particularly
well.
But the fixed-income trading unit headed by Ram Nayak is
also under pressure to keep contributing to Deutsche Bank’s
cost-cutting effort. Most of the future savings are to come from
lower back-office costs by de-commissioning IT and replacing
manual work with machines after an aggressive headcount
reduction through the previous two years.
The lender’s investment bank, of which fixed-income and
currency trading is the biggest part by far, has vowed to keep
revenues stable this year while cutting expenses by almost 10%
by the end of 2022.
