This publication recently caught up with Deutsche Bank's international private bank head at the London Frieze Art Fair, and delved into the details of how the lender is building out offerings in Europe and further afield.

Deutsche’s “bank for entrepreneurs” offering showcases how the commercial and wealth management sides of the group can dovetail to suit the needs of clients whose business and private needs often intersect. 

The Frankfurt-listed bank has so far rolled out its “bank for entrepreneurs” model in Spain and Italy and plans to extend this to other European locations and then to Asia-Pacific, Claudio de Sanctis, who is the head of the international private bank and CEO Deutsche Bank EMEA, told this publication recently.

The business model is constructed so that the bank can serve entrepreneurs, such as those running medium-sized firms, across all areas and for the entrepreneur to view the bank as a single entity.

“First leading indicators [of the Spanish and Italian businesses] are very positive and we will roll this out in select locations,” he said. This “bank for entrepreneurs” offering has already generated a buzz; the firm is getting enquiries from other private bankers interested in coming on board, de Sanctis told this news service. He spoke at the recent London Frieze Art Fair, for which Deutsche Bank is the main sponsor.

“The 'bank for entrepreneurs' refers to the integration of wealth management coverage and commercial bankers to cater to family-owned large Italian and Spanish companies and SMEs. The integration aims to provide holistic banking services at every stage of our entrepreneurial client’s life and business cycle, from business needs such as lending and corporate finance to advising on their private wealth management needs,” he said. 

Part of the attraction, so Deutsche Bank will hope, is in giving clients access to its balance sheet and expertise across all divisions. This is a challenging area to succeed in, particularly given pressures on investment banking in recent years and the need to control risk exposures.

Hard numbers 
Overall figures at the international private bank have been broadly positive, rising 6 per cent year-on-year in the third quarter of 2021 to come in at €803 million ($927 million). Within private banking and wealth management, revenues rose 2 per cent when adjusted for specific items and the impact of foreign exchange movements. The group logged positive net new asset growth for the seventh quarter in a row, with €3.1 billon during the third quarter. The first nine months of the year saw net inflows of €16.8 billion, up 137 per cent on a year ago. And the bank hired more than 150 wealth management professionals globally in the first nine months of the year.

Affluent
For the “affluent” business, Deutsche Bank’s international private bank is focussed on the shift from a broad retail offering in Italy and Spain to a more focused offering for affluent clients, de Sanctis said. “Spain is leading the charge, ahead of Italy, which will see the creation of enhanced digital services and a number of flagship branches in strategic locations, more tailored to the needs of the affluent client segment.”

“We expect the growth outlook for the IPB to largely stem from the bank for entrepreneurs and the UHNW business across every metric. For the affluent segment, we expect this to grow after we have developed the platform. We may see in three to five years that the growth from this segment could match our other two strategic pillars,” he continued. 
 

This publication asked the bank how it has coped with COVID-19.

As a result of the pandemic, one big change since the start of 2020 is that clients are more reachable and easier to have calls with, de Sanctis said, referring to the surge in the use of platforms such as Zoom.

“A lot of clients are concerned about what the world will be like, not just because of COVID-19 but because we have had 10 years or so of zero interest rates. There is a clear consensus that this situation isn’t sustainable,” he said. “We have been in a very extreme situation and via the use of extreme monetary and fiscal policy measures policymakers have been able to manage potentially existential risks for many people.”

“Times of change, as in this pandemic, make our underlying structural problems more obvious. This means that in subsequent periods of relative stability we need to work even harder on dealing with these underlying issues - otherwise we could face major risks around inequality, a lack of innovation and a deepening environmental crisis,” he said. 

Wealth management in many ways has to be considered as a form of risk management. But this is not just about mitigating risks of loss and other problems but also about not missing out on opportunities created by change, de Sanctis continued. 

“We know that changes in the economic environment often open up new perspectives, which might allow clients to take stock of previous habits or biases and therefore create room for change. As your question points out, today’s prudent risk manager must consider how to avoid missing opportunities as well as ways to reduce risks. Our relationship managers and their portfolio management teams are well versed in helping clients find ways to take advantage of these opportunities – even if they may be at the riskier end of the spectrum – by using hedging instruments as well as a traditionally diversified global asset allocation for example.

“In general terms, we have noticed that our sophisticated clients do tend to have an open mind-set and seem prepared to adjust to the conditions created by changes we have seen in the economic environment, taking advantage of many of the investment opportunities we put to them,” he said. 

Finally, this news service asked de Sanctis about Deutsche’s involvement in the art world. 

“Fine art can be more than just something to appreciate and admire; with Deutsche Bank’s expertise and due diligence, it can also serve as loan collateral. Leveraging a fine art portfolio provides our UHNW clients [with] an opportunity to monetise an otherwise illiquid asset and is just one of a number of ways we approach and consider a client’s entire portfolio of assets when building a bespoke financial plan,” he replied.