The head of Deutsche Bank’s corporate and investment bank calls for a joint approach by politicians and regulators to support European banks.
(Photo: Bloomberg)
Frankfurt Deutsche Bank laments the growing dominance of large US money houses in the domestic market. Since the Porsche IPO, in which not a single German bank was mandated to play a leading role, Deutsche Bank’s board of directors has been criticizing the actions of its US rivals. US institutions have tended to scale their loan offerings up and down depending on the market environment, Fabrizio Campelli, head of corporate and investment banking at the German industry leader, told Reuters.
“We’ve seen cases of non-German banks offering credit off the table during the pandemic while German credit institutions expanded their lines of credit.” Campelli gave no examples. The big US banks, which have doubled their market share in corporate financing over the past decade, reject the allegations.
“A number of European companies are already recognizing the risks of not working with firms that remain committed to the region for the long term,” said Campelli. From his point of view, the fact that no German institutions played a leading role in the largest local IPO of the year shows that Deutsche Bank and other European financial institutions still have a lot of work to do.
CEO Christian Sewing had already stated in September that the dominance of US banks was not a law of nature. “If we don’t want to leave the field to the Americans, Europe must create the conditions for large banks,” said Sewing. Campelli calls for a joint approach by politicians and regulators to support European banks.
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US financial institutions are not only gaining market share in Germany in the M&A advisory business, which is traditionally dominated by American banks. US competitors are also catching up on the German market in corporate financing: in 2021, the market share of the five largest US financial institutions (JP Morgan, Bank of America, Morgan Stanley, Goldman Sachs and Citigroup) increased in terms of earnings, according to Dealogic data 35 percent. Ten years ago, at 18 percent, it was only about half as high.
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The US institutions refer to the repeated allegations that they would cut back their lending to German customers in difficult times, to their growing involvement in the Frankfurt financial center.
competition on every deal
The largest US bank JPMorgan is now one of the top five financial institutions in Germany. According to Dealogic data, it is also the leading institute by revenue share in the German market in the field of corporate financing in the current year.
“Many German financial institutions are working with us on deals and we are their banking partner,” said JPMorgan Europe boss Stefan Behr in an interview with Reuters. Every deal has competition. “And if they don’t win a deal, they’re certainly not happy about it – just like we are when we lose a contract.”
Citigroup works on the German market on an equal footing with everyone else, said Germany boss Stefan Hafke in an interview with Reuters. He would like strong European banks in Germany. According to a spokesman, Bank of America, which has been involved in most major financing deals for German companies over the past ten years, has expanded its team in Frankfurt and increased its financing resources. “There is no retreat.”
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