„ FRONT STORY RESULTS

Deutsche’s trading struggles deepen

UBS, Barclays fare better in Q3 to take market share

DEUTSCHE BANK’s trading revenues
underperformed rivals and slumped 15% in
the third quarter from a year earlier, but
the bank said its turnaround plan was on
TRACKûANDûITûSHOULDûMAKEûITSûlRSTûANNUALû
PROlTûFORûFOURûYEARSûINû
$EUTSCHEûSAIDûBOTHûITSûlXEDûINCOMEû
sales and trading revenues and its equities
revenues tumbled 15% in the third quarter
FROMûAûYEARûAGOû&)##ûSALESûDIPPEDûTOû
õBNûREmECTINGûLOWERûVOLATILITYûANDû
client activity in European rates and the
shrinking of its US business in the second
QUARTERû)TSûEQUITIESûREVENUESûSAGGEDûTOû
õM

BARCLAYS and UBSûBOTHûFAREDûFARûBETTERû
"ARCLAYSûREPORTEDûAûûJUMPûINûEQUITIESû
ANDûAûûRISEûINû&)##ûWHILEû5"3SûEQUITIESû
REVENUEûANDûFOREIGNûEXCHANGEûRATESûANDû
CREDITûREVENUESûINCREASEDûBYûû4HATûSAWû
the pair outperform US banks – where
&)##ûREVENUESûDIPPEDûûANDûEQUITIESûWASû
UPûûONûAVERAGEûnûWHEREASû$EUTSCHEûONCEû
AGAINûLAGGEDûWELLûBEHINDûTHEûPACK
Deutsche is struggling to revive its
FORTUNESûAFTERûAûTORRIDûFEWûYEARSû)NDUSTRYû
sources said it had lost a lot of staff and
was in danger of losing substantial market
SHARE
“We remain concerned about DB’s
INABILITYûTOûTURNAROUNDû&)##ûEQUITIESûASû
well as transaction banking revenues,” said
Kian Abouhossein, head of European bank
RESEARCHûATû*0û-ORGAN

Deutsche’s return on tangible equity

WASûJUSTûûINûTHEûlRSTûNINEûMONTHSûOFû

this year, and there remain doubts that

NEWûCHIEFûEXECUTIVEû#HRISTIANû3EWINGûCANû

IMPROVEûTHATûTOûûBYûûORûEVENû

h/NEûCOULDûARGUEûEVENûAûû2O4%ûWOULDû

be already a big achievement – we do not

question this – but can DB get there in

TIMEûBEFOREûWEûGOûINTOûTHEûNEXTûDOWNû

cycle – hence the risk premium has to be

high for DB’s share price,” Abouhossein

SAID

ON TRACK

Deutsche said its cost and headcount

reduction plans were on track, and that

would provide the foundation for a

slimmed down business that makes better

RETURNS

h7EREûONûTRACKûFORûOURûlRSTûFULL

YEARû

PROlTSûSINCEûû7HATûWEûCANûCONTROLû

WEûHAVEûCONTROLLEDvûlNANCEûDIRECTORû

James von Moltke told reporters on a

CONFERENCEûCALL

!DJUSTEDûCOSTSûWEREûDOWNûûTHISûYEARû

and von Moltke said Deutsche was setting

money aside to smooth out its bonus costs

TOûAVOIDûAûBIGûHITûINûTHEûFOURTHûQUARTER

“We are comfortable we have put

ourselves in a position with our accrual

YEAR

TO

DATEûTOûMANAGEûEXPENSESûINûTHEû

FOURTHûQUARTERvûHEûSAID

Deutsche’s corporate and investment

BANKûMADEûAûPRE

TAXûPROlTûOFûõMûINûTHEû

THIRDûQUARTERûDOWNûûFROMûAûYEARûAGOû

ONûREVENUESûOFûõBNûDOWNû

ECM MIXED BAG

Barclays and UBS, meanwhile, showed they

could compete with the US banks in their

AREASûOFûSTRENGTH

“We are gaining market share,” said

"ARCLAYSû#%/û*ESû3TALEYûINûRELATIONûTOûTRADINGû

ACTIVITIESûh4HEREûHAVEûBEENûCOMMENTSûTHATû

European investment banks can’t compete

WITHû53ûINVESTMENTûBANKSû&ORûFOURûQUARTERSû

in a row we have gained market share, so

that has to raise a question of that view of

%UROPEANûINVESTMENTûBANKSvû3TALEYûADDED

But Barclays lagged behind US rivals in advisory

ANDûUNDERWRITINGû)TSûBANKINGûFEESûFELLûûFROMûAû

year earlier to £519m, one of its worst quarters in

RECENTûYEARSû3TALEYûBLAMEDûTHEûDROPûONûWEAKNESSû

in equity capital markets, citing a poor showing

INûTECHNOLOGYûANDûBIOTECHûSECTORS

5"3SûTHIRD

QUARTERû%#-ûREVENUEûTUMBLEDû

û)TSûDEBTûCAPITALûMARKETSûREVENUEûFELLû

ûBUTûITSû-!ûADVISORYûREVENUEûWASûUPû

ûFROMûAûYEARûAGO

Deutsche origination and advisory held

up better, reporting combined revenues of

õMûDOWNûûFROMûAûYEARûAGOûANDûINûLINEû

WITHû53ûRIVALSû)TSû%#-ûREVENUESûREBOUNDEDû

ûOFFSETTINGûAûûFALLûINû$#-ûANDûAûû

DROPûINû-!ûADVISORYûFEES

Steve Slater

People

Markets

14

Lazard,

Evercore and

Moelis are all heading

for record years,

even after an M&A

slowdown in Q



The healthcare

advisory

landscape shifts

amid changes in

bankers at JP Morgan

and Perella Weinberg

15

Barclays is

redeeming

expensive US retail

preference shares and

AT1s to cut costs and

clean up its funding

“Even a 6% RoTE would be a

big achievement ... but can DB

get there in time before we go
into the next down cycle?”

Source: Company results, IFR calculations

0

5

10

15

20

25

30

35

US average UBS Barclays Deutsche

 FICC Q3  FICC YTD  Equities Q3  Equities YTD

 Advisory/underwriting Q3  Advisory/underwriting YTD

DEUTSCHE’S STRUGGLES: LAGS US,

EUROPEAN RIVALS IN Q3 AND YTD

PERCENTAGE CHANGE VS ONE YEAR AGO