Deutsche Bank scraps 60% of trading apps with costs in focus

DEUTSCHE Bank decommissioned 60 per cent of the underlying applications the company uses to run its fixed-income trading business as it seeks to rein in costs.

The move helped Deutsche Bank automate more of its sprawling trading business, home to one of the world’s largest currency-trading desks, said Fabrizio Campelli, who oversees the corporate and investment banking unit. It’s part of an effort to reduce the division’s cost-to-income ratio, a measure of profitability that shows how much it costs to produce a US dollar of revenue.

“There’s a very big focus on cost efficiency,” Campelli said on Tuesday (Sep 12) at the Barclays Global Financial Services Conference in New York. “The low-hanging fruits, if you may, have all been harvested, and we’re now targeting much more front-to-back efficiency measures.”

Stung by inflation, a botched IT overhaul and ongoing control deficiencies, Deutsche Bank has been struggling to contain expenses in recent quarters. As a result, chief executive officer Christian Sewing recently unveiled fresh job cuts in an effort to keep the bank on track to hit a medium-term profitability target of more than 10 per cent in return on tangible equity.

The company is beginning to see the early signs of a turnaround in investment banking activity, aided by the US$1 trillion that private equity giants are seeking to deploy, Campelli said. That should help the company’s advisory business as well as those focused on equity capital markets and debt underwriting.

“There’s a lot of pent-up energy needing to find its way into the market,” Campelli said. “We’re starting to see more activity in M&A mandates and, to a certain extent, actually a return to markets in ECM particularly after this summer.” BLOOMBERG