Deutsche Case Study

Analysis of Deutsche Bank and her likely entry into the romanian banking sector 

The client Deutsche bank AG (FwB : DBK, NYSE DB), Literally  “German Bank” is an international banking and financial service company with its headquarters in the Deutsche bank twin towers in Frankfurt , Germany. The company has more than 100,000 employees in over 70 countries and has a large presence in Europe. The client Deutsche bank has both retail and commercial operations; she offers financial products and services for corporate and institutional customers along with private and business customers. The company already has offices in major financial centers including London, New York City, Chicago, Zurich, Singapore, Hong Kong, Milan, Tokyo , Paris, Moscow, Sydney, Toronto, Istanbul, Madrid, Dublin, Amsterdam, Warsaw etc.

The client is thinking about further expanding into the Romanian market and your team has been engaged to carry out a market research and feasibility study on the profitability if any of venturing into the Romanian banking sector.

 

Possible solution:

Deutsche bank is Europe’s only global investment bank and one of the continent’s best capitalized lenders. It is of German  origin, and it provides various banking and financial services and has her headquarters in Frankfurt Germany.

Deutsche bank provides services in corporate and investment banking, private and business clients and asset & wealth management. With the array of financial services, there is little wonder why Deutsche bank may want to flex her financial muscle and penetrate into the Romanian market. The Romanian market as at 2015 recovered positively post financial crisis and it is forecast to remain robust over 2015- 16. Although there is an increase in GDP due to a gradual recovery of domestic demand and strong  exports. It is still below the GDP of the pre-crisis level.

This can be attributed to a significant drop in investments. Romania’s economic growth is expected to remain robust in 2015 and 2016, mainly driven by domestic demand and accompanied by a stable labor market.
Deutsche bank’s goal
Deutsche bank’s  goal is to take advantage of the steady growth of the country and the increase in domestic demand. They plan on doing this by bringing in innovative solutions from their four business divisions.

Their first being corporate banking  and securities division aims to service corporate clients in the issuance of debt and equity, and capital markets leverage of large and medium sized corporations. Also they hope to combine sales, trading and structuring of a wide range of financial market products including bonds, equities and equity linked products, exchange traded and over the counter derivatives, foreign exchange, money market instruments, securitized instruments and commodities.

Deutsche bank’s  global and transactional banking division would seek to provide commercial banking products and services for both corporate and financial institutions to the Romanian market bringing innovative services in domestic and cross border payments ,risk mitigation and international trade finance as well as trust, agency, depository, custody and related services. Business units proposed to be set up there are cash management, trade finance and securities services unit.

Deutsche bank’s private and business clients division would provide branch banking and financial services to private customers, self  employed clients as well as small and medium sized businesses in Romania. They seek to invade the Romanian market with their asset management division by providing one of a kind mutual fund products through the Dws investments franchise. They would offer institutional clients including pension funds and insurance companies a broad range of services from traditional to alternative investment products.

Deutsche bank’s wealth management unit also under the umbrella of the asset & wealth management division would provide services to high and ultra high net worth individuals and families as well.  A fully integrated wealth management service would be deployed including inheritance planning and philanthropic advisory service.

Filed Under: Research

Case | HBS Case Collection | January 2008

The Deutsche Bank (A)

by David A. Moss

Abstract

Founded in 1870 to help finance surging German exports and imports, the Deutsche Bank soon moved into domestic banking. In fact, its founders aimed to create both a commercial bank and an investment bank under one roof—that is, a "universal bank." By the end of the nineteenth century, the Deutsche Bank was not only the largest bank in Germany, but also a strategic actor in the broader European market and, indeed, in the world economy. Over the first half of the twentieth century, however, the bank faced a series of national crises: defeat in WWI (1914-1918), revolution in 1919, hyperinflation in 1923, economic depression in the early 1930s, the rise of Hitler in 1933, another world war in 1939, and then total defeat in 1945. At the end of WWII, the Soviets closed the Berlin headquarters of the Deutsche Bank as part of their denazification effort. Meanwhile, the United States, Britain, and France, occupying the western portion of Germany, attempted to implement a policy of economic decentralization and broke what remained of the bank into small pieces. By 1950, facing a proposal from leading German bankers to allow the big banks to begin reconstituting themselves, the Allied powers and the new German legislature had to decide whether to accept this proposal or reject it.

Keywords: History; Investment Banking; Commercial Banking; Banking Industry; Germany;

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