Frank Krings (Deutsche Bank):
From Here to Eternity
When deutsche bank decided to commission its own Luxembourg office in the 1980ies, it called on Gottfried Böhm, a Pritzker Prize-winning third generation architect whose signature works include the Bensberg town hall and pilgrimage church at Neviges in Germany. The Kirchberg edifice, home to international corporate lending, wealth and asset management businesses, has its own aura of a cathedral, acknowledges Deutsche Bank Luxembourg CEO Frank Krings.
How do Deutsche Bank’s activities in Luxembourg
fit into its overall structure?
The group includes two main entities in the grand duchy, including Deutsche Bank Luxembourg, which is one of the country’s five systemically important institutions as defined by European Banking Authority standards and is directly supervised by the European Central Bank. The bank has two main pillars of activity, financing corporate clients and wealth management. We finance corporations around the world, on medium and long-term cross-border basis, as a lender of record in syndicated loans as well as a provider of large bilateral loans. This corporate &investment banking activity calls for €6 billion in capital, among the largest capital base of any institution here. Furthermore, Deutsche Bank Group’s centre of expertise for loan agency services resides in Luxembourg, Also overseeing the second, London based excellence team. Meanwhile, our international wealth management business provides quality services to families across generations and countries. We have strategic ambitions in this area to build out Luxembourg as the group’s centre of excellence for wealth management within the EU and international lending hub for wealth management clients.Once this process in completed, international wealth management clients who wish to bank in the European time zones and legal frameworks will have a choice between an institution within the EU and the Euro area, in Luxembourg, or outside it, in Switzerland or Great Britain. In all these countries, the wealth management services will be offered through direct or indirect subsidiaries of the parent company, as opposed to parent branches.
“We are investing €30 million to implement a state of the art
What is the second main entity operating
Deutsche Bank Group’s asset management division
manages some €711 billion globally, of which around a
quarter is administered in Luxembourg by Deutsche Asset Management, our local management company. The recently established holding of our asset management division, also including the Luxembourg Asset Management company, is preparing for a partial IPO next year, still leaving Deutsche Bank Group with a controlling stake.
What are the bank’s priorities as it prepares
for the future?
Over the past 18 months, we have streamlined our
activities in terms of strategic focus as well as balance
sheet and organisation. We recently announced the
divestiture of our alternative fund services and corporate services businesses. Both are relatively fringe activities, so the transactions provide simplification and enable us to focus on our core activities. We have also reduced the balance sheet by half in 15 months, from €80 billion to €40 billion, mostly by optimising interbank activities. Our core businesses are now more disciplined and compact, which enables us to invest efficiently, most significantly in IT. Our heritage system was very effective, but was at the end of its useful life, so we are investing €30 million to implement a state of the art platform for the benefit of our clients. The project was launched three months after my arrival in March 2016 and we are on track to deliver despite a very demanding timeline. We are also making a major investment in people. Although the overall headcount has remained broadly the same, we have created new functions and teams totalling some 10% of our workforce through a combination of retraining, redeployment and
Which opportunities and challenges do you see for
Luxembourg in general and the bank in particular?
It is important for the country, as well as for the bank, to focus on what we are good at, to play to our strengths and remain true to our DNA. Deutsche Bank Luxembourg is not a trading institution, an important business that is carried out in Frankfurt, Hong Kong, London or New York. Luxembourg is not a trading jurisdiction. The strength of the country lies in businesses and a talent pool with a long-term perspective. Here we focus on medium to long-term financing and approach wealth management with a multi-generational perspective. On the asset management side, open-ended funds could in theory exist for eternity! Wherever you look, Luxembourg is stable, with a triple-A rating and a dependable political system. Far from a drawback, its dimensions are an advantage in the world of tomorrow where size is less important than speed and agility. Here we have the entire ecosystem under one
roof: IT support, treasury, legal, client service. It’s like the central point of this building, indicated by a spot on the ground floor, from where anything you say can be heard all the way up to the roof!