NEW YORK: From its tower on Wall Street, Deutsche Bank enjoys a commanding view of lower Manhattan. Its target is to gain a presence in investment banking which is nearly as dominant.
As Germany's largest bank prepares to announce a new strategy, possibly before the end of this month, it is packing its ranks with Wall Street veterans and preparing to give its division focused on capital markets, trading and advisory an even bigger role.
Deutsche increased its global market share in 2014 to 4.66 percent in the $92 billion market for investment banking fees, placing it ahead of every other European bank and just below the US top five, according to Thomson Reuters data.
That helped it close the global revenue gap with rivals like JP Morgan and Bank of America Merrill Lynch and put it within striking distance of No. 5-ranked Citigroup.
Deutsche has lapped up business left by European rivals like Barclays and Credit Suisse, who still have bigger US operations in some fields but who are paring back. "As many of our competitors retreat from the US, we see opportunities to capture more market share," the bank's North American head, Jacques Brand, told Reuters last month.
Deutsche is reviewing its universal banking model that has it selling everything from home loans in Wuppertal to equity derivatives in New York, to see whether selling parts of the group, such as its Postbank retail branch network, would boost returns.
It wants to take on US investment banks on their turf and in February for example poached Jeff Urwin, co-head of global investment banking at JP Morgan.
Deutsche's strength is its global reach across debt and equity markets and other financial services like cash and transaction management, investors say.
It is one of the top two banks in currency trading. The bank's huge bond franchise helps as well - Deutsche is No. 4 globally by fees, outpunching Goldman Sachs.
That gives Deutsche a competitive edge when dealing with big US clients, said one veteran credit analyst who has covered the bank for more than a decade.
One coup was Alibaba's $8 billion bond sale in November, which the bank led two months after running its $25 billion New York listing, the largest capital raising ever.
HOLDING ITS OWN
The German bank chalked up another series of victories with Apple, leading four bond issues since 2013 worth a total of $39 billion. That relationship harks back to 2010 when the bank was mandated to handle back-office transactions for Apple's online store, iTunes.
"Deutsche seems to be holding its own, particularly in fixed income, and actually making a decent job of increasing its footprint in the equity business," said analyst Chris Wheeler at research specialist Atlantic Equities.
But the road ahead is rocky. The bank has pared business lines such as US commercial paper or single-name credit default swaps. It made no sense to maintain unprofitable activities in an attempt to be all things to all people, a senior US executive said.
Regulators now impose increasingly stringent capital requirements.
Deutsche has this year for the first time had to submit to stringent stress tests imposed by the Federal Reserve.
The bank has suffered under fines and investigations and in 2014 was the target of criticisms from US regulators for "unreliable" financial reports.
The bank hired hundreds of staff to beef up compliance and will add Steven Reich, a defense lawyer with experience in the White House under Bill Clinton and Barack Obama.
Tougher capital requirements mean investment banks overall are less able to lure lucrative business with the offer of cheap loans, as many often did in the past.
"Once the investment banks stop taking balance-sheet risks, it becomes a commodity game, and there's not a lot of loyalty among customers," said New York hedge fund investor Maria Boyazny, head of MB Global Partners. "Whoever offers the best terms, that's who you go to".
Despite the tough environment, the bank strengthened its market position in North America in 2014 without increasing staff and while reducing the size of its US balance sheet.
Detractors say Deutsche is unlikely ever to command the same US market share as incumbents.
But that's not lost on Deutsche's top US executives, who for now are content to close the gap. "We don't beat ourselves up for not being Goldman Sachs", says one.
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