Deutsche Bank: Market stand and Operations in the UK
"Deutsche Bank's presence in the UK dates back to 1873, when it opened a branch in London. It was DB's most important branch until WW1 in 1914. Deutsche Bank returned to London in 1973 with a representative office, which was converted into a branch in 1976.
Deutsche Bank combined its investment banking activities under one management in London. With over 8,000 London-based employees representing 90 nationalities, Deutsche Bank AG is one of the largest employers and occupiers of office space in the Square Mile. Deutsche Bank's London operations generate around 33% of global Corporate and Investment Banking revenues. The UK operations are run by Colin Grassie as the Chief Executive Officer.
DB's UK revenues shrank by 9.8% in 2010 to reach a value of $2,902.1 billion. In 2015, the United Kingdom banks sector is forecast to have a value of $15,108.6 billion, an increase of 38.6% since 2010 of which DB holds 16% market share. Bank Credit is the largest segment of the banks sector in the United Kingdom, accounting for 77.6% of the sector's total value. The United Kingdom accounts for 20.2% of the European banks sector value. DB UK operations were particularly hard hit during the banking crisis and declined in 2010. This has intensified rivalry, particularly where capital-free income is concerned as banks look to increase this revenue stream.
Northern Rock PLC's planned return to private ownership got a kick start with the hiring of Deutsche Bank AG to oversee the process though the U.K. government. In March 2010, Telecity Group PLC announced that Deutsche Bank AG has a holding interest of 6,315,250 ordinary shares representing 3.1880% of issued share capital of the Company.
In May 2010, Morse plc announced that Deutsche Bank AG is interested in 43270113 shares of the Company, representing 3.3315% of the total voting rights. Deutsche Bank AG announced that its London Branch will act as a Sole Book runner on the international equity offering for Pioneer Corporation. This international equity capital raising comprised 92 million shares with an issue price of JPY 332 per share. The offering amounted to JPY 30.5 billion.
The global economic slowdown and recovery scenario are likely to create challenges for the company over the next few years. Refinancing needs close to 300 billion, according to the IMF, bonds maturing in the PIIGS countries (Portugal, Ireland, Italy, Greece and Spain) are expected to spill over to other regions resulting in adverse feedback loop. Significant needs in the PIIGS are expected to create pressure on bond markets with those of the US, the UK, Japan, and other Eurozone having simultaneous funding needs.
As a result, banks are expected to face difficulty in managing portfolio risks in the Eurozone. Such crises could lead to increasing deficit, followed by an increase in debt and economy downgrades, ultimately leading to high defaults.