Global Transaction Banking

Stable performance in all regions

In brief

  • Improved business performance, growth in transaction volumes
  • Consolidation of home market position
  • Expansion in high-growth regions
  • Enhancement of cross-divisional cooperation and client coverage
William B. Tyree, New York, Partner bei Brown Brothers Harriman & Co. (photo)

»BBH and Deutsche Bank have a long-lasting and trusting relationship. The bank provides us top-tier service in both sub-custody and cash management and we value their expertise and innovative product solutions.«

William B. Tyree,
New York, Partner at Brown Brothers Harriman & Co. (BBH)

Deutsche Bank opened its first branch in New York in 1979 and was the first German bank to list on the NYSE (in October 2001).

Global Transaction Banking (GTB) provides commercial banking products and services for both corporates and financial institutions, including domestic and cross-border payments, risk mitigation, international trade finance as well as trust, agency, depositary, custody and related services. It comprises the Cash Management, Trade Finance and Trust & Securities Services businesses.

Throughout 2013, the macroeconomic environment was challenging, with persistently low interest rates in core markets and competitive pressure on margins. Furthermore, foreign exchange movements, compared to 2012, adversely impacted GTB’s reported results in euro.

Despite the headwinds associated with the challenging market conditions and restructuring costs related to the execution of the 2015+ strategy, business performance improved on 2012. While total GTB revenues only decreased slightly as pressure on revenues in the Europe, Middle East and Africa (EMEA) region was largely offset by growth in Asia Pacific and the Americas, the cost/income ratio dropped significantly. Overall, GTB’s income before income taxes, amounting to € 1.1 billion, rose compared to the previous year (2012: € 0.7 billion). Trade Finance benefitted from strong volumes, offsetting the impact of margin erosion. Trust & Securities Services demonstrated robust performance under these conditions, buoyed by higher transaction volumes. Revenues in Cash Management also benefitted from stronger transaction volumes.

Excerpt from segment reporting (Global Transaction Banking1)

Global Transaction Banking recorded income before income taxes of € 1.1 billion in 2013 (2012: € 0.7 billion). Net revenues decreased compared to 2012, which included a settlement payment related to the turn-around measures of the commercial banking activities in the Netherlands. Provision for credit losses increased primarily driven by a single client credit event in Trade Finance. Noninterest expenses reduced versus 2012, mainly driven by the nonrecurrence of a litigation-related charge as well as lower turn-around charges in the Netherlands.

 

 

 

in € m.

2013

2012

Net revenues

4,069

4,200

Total provision for credit losses

315

208

Noninterest expenses

2,648

3,326

Income before income taxes

1,107

665

Return on equity (pre-tax) in %

22

16

Risk-weighted assets

36,811

34,976

Assets

97,240

87,997

1 Excerpt from segment reporting. For notes and other detailed information, see Financial Report 2013 (Management Report).

Growing trade business volumes

Growing trade business volumes (bar chart)

GTB’s strategy remained focused on target client groups, products and geographies. Its strategic priorities include strengthening relationships with existing clients and acquiring new clients, investing in solutions and operational excellence, continuing to optimize its business portfolio and global footprint, identifying and achieving synergies from closer collaboration with other business divisions, as well as continued strict cost, risk and capital discipline.

In 2013, GTB adapted its business model, also to align with the difficult external conditions. For example, GTB is continuously expanding its cooperation with other divisions of the bank to serve clients more effectively. In this context, the division further strengthened its partnership with Corporate Banking & Securities (CB&S). For its corporate clients, GTB intensified its collaboration with the Capital Market and Treasury Solutions (CMTS) team. In Germany, GTB successfully set up a joint venture with Private & Business Clients (PBC) to combine GTB’s extensive product expertise and international reach with PBC’s advisory capabilities and sales power, thereby increasing coverage of medium-sized companies (see page 56). Together with DeAWM, GTB also optimized its front office capabilities.

Solid business development across the world

GTB’s global business, which operates in 47 countries and serves clients in 190 locations and jurisdictions, continued to focus on expanding its franchise in high-growth regions while consolidating its position in its home market.

In the EMEA region, the ongoing drive to turn around GTB’s business in the Netherlands gathered momentum in 2013. In North and South America, revenues and profitability rose and major mandates were secured with target clients across the region. In addition to business growth in the USA, GTB expanded its presence in Latin America notably, in Brazil and Mexico.

New products in Chinese

renminbi

Despite slower growth in parts of the Asia Pacific region, GTB succeeded in expanding its physical presence in key markets such as China and India. It also broadened its client offering in Chinese renminbi, reflecting the growing importance of the currency. GTB increased its strategic focus on those countries that are part of the Association of Southeast Asian Nations (ASEAN) in order to diversify revenue streams.

Client support in a changing regulatory environment

GTB provided intensive support to its clients on the transition to the Single Euro Payments Area (SEPA) and the use of the second generation of the TARGET gross settlement system (TS2). In addition, GTB also advised its clients on regulatory challenges, such as Basel 2 and 3, and rules under the Alternative Investment Fund Managers Directive (AIFMD).

Cash Management: excellent position in clearing

Leader in euro clearing

Leader in euro clearing (bar chart)

GTB’s Cash Management for Financial Institutions (CMFI) is the world’s largest clearer of euro cash payments and a leading U.S. dollar cash clearer. Moreover, CMFI is one of the few global cash management providers for financial institutions that provide cross-currency payment products such as FX4Cash.

In 2013, CMFI maintained its dominant position in euro clearing for institutional clients and remained one of the key players in EMEA and the market leader in Germany. CMFI has expanded its presence in the U.S. dollar market and maintained its position as one of the top six U.S. dollar clearers.

Cash Management Corporates (CMC) offers a range of solutions for clients to optimize their treasury and payment businesses and improve cash flow. In 2013, CMC acquired new corporate clients and focused investments on higher margin products. Cash Management received numerous client mandates in 2013. Payment volumes via the international clearing system, the Automated Clearing House (ACH), rose by about 37 %.

Trade Finance: leading position in key markets

In 2013, the Trade Finance business gained momentum in EMEA, the Americas and Asia Pacific, with a focus on consolidating its leadership position in key markets such as Brazil, Russia, India and China. Moreover, the unit continued to invest in people and business platforms to grow in under-represented target markets.

Significant market share
in trade finance

Significant market share in trade finance (bar chart)

Trade Finance closed a number of landmark deals across all product lines and regions in 2013, including in emerging markets, with a special emphasis on financial supply chain business.

Trust & Securities Services: enhanced operational performance

Trust & Securities (TSS) offers various administrative securities services. The business comprises Direct Securities Services (DSS), Trust & Agency Services (TAS), and Global Equity Services (GES).

In 2013, transaction volumes and assets under custody of DSS, which includes domestic custody business, agency securities lending and fund services, rose significantly. The unit strengthened its position in emerging Asia Pacific, Central and Eastern Europe and Latin America while continuing to grow market share in Europe. Moreover, client and market recognition was high, underlined by numerous awards. TSS’s agency securities lending business gained market share and was top rated in Global Custodian’s securities lending survey.

Furthermore, the TAS business focusing on corporate trust and administration maintained its leading position as trustee for U.S. asset and mortgage-backed securities as well as other debt instruments.

The GES business comprises depositary receipts and post-IPO services. The business continued to gain significant market share globally with a focus on developing its presence in Asia Pacific.

Outlook

GTB

A stable pillar

With attractive returns, GTB is a stable pillar of the Deutsche Bank Group. The division will continue to pursue consistent cost and risk management and the efficient use of capital. GTB aims to maintain growth and revenue momentum in 2014 while delivering on key strategic priorities across all businesses.

The business continues to focus on strengthening its client relationships in mature markets as well as driving additional growth in selected emerging markets. The cooperation with other areas of the bank is continuously being expanded to ensure a wider range of clients can benefit from GTB’s products and services.

Awards 2013

Treasury Management International
Global Bank of the Year, Cash Management and Best Bank for Risk Management

The Banker
Most Innovative Transaction Bank from Europe

Euromoney
Cash Management Survey – No.1 Cash Manager in Germany and Western Europe (Nonfinancial Institutions) and No. 1 Euro and Dollar Institutional Cash Management Provider in Europe and North America

Asian Banker
Best Depositary Receipt Bank Asia Pacific

Trade Finance Awards for Excellence
Best Trade Bank in Western Europe

FImetrix
Distinguished Provider in Transaction Banking

Greenwich Associates
European and Asian Quality Leader in Large Corporate Cash Management as well as for Germany, Italy, China and Singapore