CChristian Sewing is an honest bank president. Having just been re-elected, he takes a stand. He finds the right words. The bank president, whose main job is head of Deutsche Bank, is worried about a shift to the right in the state elections in Saxony, Thuringia and Brandenburg. The forecasts for the AfD there are dramatic, he said a few days ago. “It's no longer just about parliamentary disruptive maneuvers. It’s about the future of our democracy – and also our location.”
Sewing has managed to make his voice heard again as a senior representative of the financial industry. The words of a bank president and Deutsche Bank CEO have weight again. The fact that it would take more than 15 years after the outbreak of the financial crisis to establish this again shows the loss of trust that bankers once caused. The damage has not been forgotten, but it has been dealt with.
Sewing has also managed to set a new tone at Deutsche Bank. Since taking office in 2018, the native of East Westphalia has managed to bring the bank closer to its core customers again. Less glamour, more home cooking. Less scandals, more down to earth. Less high-end clientele, more middle class. Bankers' focus on their core activities is clearer, and the trust that is so important for a bank is back. The workforce is no longer embarrassed to be seen as employees of a scandalous bank.
Is Sewing still the right man?
And yet the question is increasingly arising as to whether Sewing is the right man for this position in the medium or even long term. The share price is not really moving. He fluctuated significantly during his term in office, but the price gains compared to the 11 euros when he took office are in the cent range. In view of positive earnings figures for the 2023 financial year, the price temporarily climbed above 12 euros on Thursday – an increase of a good 5 percent compared to the previous day.
The rather poor share price development over the years may also annoy Sewing personally. For the largest German financial institution with a claim to European, if not global, importance, a market capitalization of just under 25 billion euros is meager. The American investment bank JP Morgan is worth around eighteen times as much. What large institutional and private investors are missing is what is called an “equity story” in the capital markets, a growth story for the future.
Sewing owes it. Deutsche Bank should continue to grow. That should be considered a minimum goal. Cost control plays a big role. In terms of employees alone, there will be a further reduction of 3,500 jobs. The efficiency gains are expected to run into the billions and the cost/income ratio should fall to less than 62.5 percent. A value that is still high compared to other European banks.
Sewing has proven itself to be an efficient restructuring company. He got the bank back on track. However, his outlook for the future is not very concrete and still belongs in the drawer of trust building. Sewing is focusing on growth potential, expertise and partnership with customers. Such words had become foreign words in the wild years of arrogance. It is reassuring that these times are over. Germany needs a strong, reliable, global German bank. However, the current board is still trying to convince market participants that promises are valid. Delivering results is still a value in itself for Deutsche Bank in 2024.
Buying Commerzbank is not an option
As if out of nowhere, a rumor has now emerged as to whether the resurgent Deutsche Bank might be interested in the also restructured Commerzbank. Whatever the motives for this rumor, the speculation about a merger that keeps flaring up shows two things: On the one hand, Deutsche Bank is once again perceived as a hunter, no longer as the hunted. On the other hand, there is the question of size: In the long run, isn't Deutsche Bank ultimately too small to be able to survive in global competition – especially with US banks?
Sewing is not interested in these discussions at this point. The trained risk manager also operates on sight, even in the face of the many global crises. He will soon have to develop more imagination.
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