Banking

Deutsche Bank’s Sewing says he’s laying groundwork for deals

Deutsche Bank must be ready for possible acquisitions once consolidation in European banking accelerates, CEO Christian Sewing said, the clearest hint yet that he’s considering deals again halfway through his four-year turnaround program.

Size is becoming “even more important” in the financial industry because globalization is becoming more complex and technological advances require large investments, Sewing said in a speech prepared for Deutsche Bank’s annual general meeting next week that was released on Wednesday.

“We must create the conditions to be able to play an active part in cross-border European consolidation,” Sewing said. “And that will happen sooner or later.”

Christian Sewing, chief executive of Deutsche Bank AG.

Krisztian Bocsi/Bloomberg

Sewing has been dropping increasing hints that he’s interested in buying competitors after the German lender posted its first profit in six years and its shares outperformed peers since the onset of the pandemic last year. While the CEO has long been a proponent of consolidation in Europe, he’s also said he doesn’t want Deutsche Bank to be a takeover target.

“Our mission is clear,” Sewing said in his speech. “Germany needs a global bank. And we are that bank.”

The comments come two years after he unveiled a massive turnaround plan that saw the lender pull out of equities trading and slash thousands of jobs. Sewing said in the speech that most of the cuts are now over and his aim now is to achieve “sustainable profitability” by growing while keeping costs in check.

Just before unveiling his plan, Sewing had held formal merger talks with Commerzbank AG, though he eventually walked away. Deutsche Bank around that time also informally explored a deal with UBS Group AG. Those talks were quickly ended.

Since then, the German lender has made progress with its turnaround, helped by a trading rally that’s now well into its second year. More recently, Deutsche Bank’s asset manager DWS Group has begun scanning for large-scale deals after growing confident of Sewing’s backing for potential acquisitions.

Sewing indicated in his AGM speech that the bank is performing well in the current quarter, after reporting the highest profit in seven years in the first three months. Its share price is up 31% this year and has more than doubled from a record low in March of last year.

“As business continues to progress well in the second quarter, we are encouraged that” the outlook given for the full year remains appropriate, Sewing said in the speech.

Deutsche Bank last month upgraded its full-year revenue outlook as a market rally continues to fuel trading. The lender now expects group revenue to be at a similar level as last year, after previously expecting a decline.



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