Global Transaction Banking

Profitable international growth


Hans-Peter Rupprecht, Corporate Treasurer, Siemens AG, Munich (photo)

As a global company, we need banking partners who can offer us professional services worldwide. Deutsche Bank delivers first-class services in all areas of banking – from advisory and capital markets execution expertise to global cash management, from trade finance to risk management solutions.

Hans-Peter Rupprecht,
Corporate Treasurer, Siemens AG, Munich

The Global Transaction Banking (GTB) Corporate Division provides commercial banking products and services for corporates and financial institutions worldwide, including domestic and cross-border payments, risk mitigation and financing of international trade as well as trust, agency, depositary, custody and related services. GTB is one of the key pillars of Deutsche Bank. It comprises the Cash Management, Trade Finance and Trust & Securities Services businesses.

Despite the challenging macroeconomic environment, particularly in Europe, and persistently low interest rates, we expanded our business, significantly increased revenues and operating profitability and delivered a solid result in 2012. GTB benefitted from a “flight to quality” as clients sought stable and reliable banks. Client deposits increased by 20 %. This demonstrates GTB’s resilience and its strength as a growth business across economic cycles. At the same time, we continued to recalibrate GTB’s business by restructuring certain areas as well as its client coverage and sales model. We also realigned the commercial banking activities in the Netherlands which we acquired in 2010, and we will continue to integrate this business in GTB in 2013.

GTB has positioned itself as a pioneer in some of the financial developments and regulatory changes taking place worldwide. One example of this is the Single Euro Payments Area (SEPA), which harmonizes domestic and cross-border payments, bringing benefits for GTB clients that operate internationally. As the pre-eminent bank in the eurozone, Deutsche Bank is assisting its clients in navigating through this process as the 2014 deadline approaches. Furthermore, GTB has assessed the impact of Basel 2 and Basel 3 along with the opportunities that will emerge as a result.

Excerpt from segment reporting (Global Transaction Banking1)

The Global Transaction Banking Corporate Division recorded income before income taxes € 0.7 billion in 2012, compared to € 1.0 billion in 2011. GTB’s results in 2012 included a net charge of € 534 million in the fourth quarter of 2012, which primarily included a litigation-related charge and measures related to the turn-around of the acquired commercial banking activities in the Netherlands. Excluding this net charge, income before income taxes for 2012 would have been well above the prior year. Net revenues increased by € 398 million.

 

 

 

in € m.

2012

2011

1

Excerpt from segment reporting. For notes and other detailed information, see Financial Report 2012 (Management Report).

Net revenues

4,006

3,608

Total provision for credit losses

168

158

Noninterest expenses

3,169

2,411

Income before income taxes

669

1,039

Return on equity (pre-tax) in %

22

34

Risk-weighted assets

27,093

26,986

Assets

77,378

85,751

Significant market share in trade finance

Significant market share in trade finance (bar chart)

GTB’s success is underpinned by a diversified global portfolio and a solution-oriented, volume-driven business model that benefits from scale effects. GTB continues to invest in its IT platform and deepen its client relationships. It is driving synergies across the bank through closer cooperation with Corporate Banking & Securities, Asset & Wealth Management and Private & Business Clients. This has delivered an integrated approach that examines client needs even more closely and provides comprehensive solutions drawn from across different areas of the bank.

GTB has established a strong position in attractive growth markets worldwide such as China, India, Latin America and Russia. Overall, GTB is present in 46 countries and serves clients in more than 190 locations.

In 2012, GTB grew its franchise in the Americas and Asia Pacific and maintained its home market leadership in Germany, built on the foundation of its strong Cash Management and Trade Finance businesses. In the year under review, Deutsche Bank’s share of the export letters of credit market in Germany averaged 27 %.

Top position in euro clearing reasserted

Leader in euro clearing

Leader in euro clearing (bar chart)

GTB’s Cash Management business remained the number one euro clearing house, and was ranked among the top six U.S. dollar clearers in 2012 (CHIPS, September 2012). There was market-wide acknowledgement of GTB’s leading position in the form of industry awards and accolades. For example, in Euromoney’s annual survey Deutsche Bank was named Best Cash Management House in Germany and Best Cash Management House in Western Europe. Survey participants also ranked Deutsche Bank number one in euro and U.S. dollar clearing for financial institutions in Europe. Furthermore, GTB established itself as a multi-currency service provider, broadening its range of services in Chinese renminbi (RMB) and other currencies.

The Cash Management business secured a number of landmark transactions in the year under review. It pursued its strategy of focussing on target clients while increasing operational efficiency and reducing complexity. There was continued emphasis on the successful cross-currency payments platform, FX4Cash, as well as closer cooperation within GTB and with other areas of the bank.

Innovation played a key role in GTB’s positive performance, notably in the cross- divisional development of its Autobahn App Market. This app-based electronic service provides companies with integrated access to Deutsche Bank’s wide range of financial products. GTB has harnessed this new technology to deliver liquidity management and fund administration services as well as other solutions to its clients.

Established lead arranger of syndicated trade loans

Growing trade business volumes

Growing trade business volumes (bar chart)

Measured in terms of mandates, GTB’s Trade Finance business was again one of the leading arrangers of syndicated trade loans in 2012. The business generated double- digit growth across many products and regions, notably in connection with mandates to optimize financial supply chain management. Worldwide, there was growing demand for traditional trade finance products such as letters of credit and guarantees. GTB also played a pivotal role in the introduction of the Bank Payment Obligation, a standardized product defined as an irrevocable conditional undertaking to pay given by one bank to another, thus providing the benefits of a letter of credit in an automated environment.

The Trade Finance business received numerous awards in Europe, North America and Asia. For example, Deutsche Bank was named Best Trade Bank in Europe by Trade Finance Magazine.

Strengthened position in securities services

The Trust & Securities Services (TSS) business, which offers a wide range of administrative services for securities, continued to refine its strategy in 2012, with a focus on its business model, risk management, staff and organizational structure. As part of an analysis of the business, GTB identified a series of opportunities, which included efficiency gains and a number of measures to make the business more robust and to expand the range of products and services. TSS maintained its strong market position as demonstrated by a host of industry accolades for hedge fund services, corporate trust, depositary receipts and custody. GTB held in excess of €1.5 trillion in assets under custody on its books in 2012 and more than € 70 billion in assets under management. In 2012, Trust & Securities Services recorded significant growth in agency securities lending, which was attributable to investments made in that business during the previous year. 2012 was a successful year for the Corporate Trust business. It won important mandates in all regions, including transactions in the resurgent escrow services business.

In 2012, Trust & Securities Services and Cash Management benefitted from GTB’s enhanced coverage of the highly important financial institutions segment. A newly created cross-divisional sales team established a single contact point for GTB clients, thus optimizing communication between clients and the bank. Cash Management improved its coverage of non-bank financial institutions and the broker-dealer segment.

By focussing on target clients, products and regions, GTB aims to ensure that Deutsche Bank is one of the best banks in the world for transaction banking. GTB is a growth business and consistently delivers attractive returns, while absorbing relatively low levels of capital and tightly managing risk. In 2013, GTB is well-placed to prosper in all major regions and products and aspires to double profitability in the next three years through targeted investments in scale, technology, services and people.

Awards 2012

Euromoney

Best Cash Management House in Western Europe

Trade Finance

Best Trade Bank in Europe

Global Trade Review

Best Global Commodity Finance Bank

Infrastructure Investor

Global Corporate Trust Services Provider of the Year