Global Transaction Banking

Capturing opportunities in growth regions

In brief

  • Revenue growth in a challenging environment
  • Leading position in euro clearing
  • Organization realigned to client groups

€1.2 billion

income before income taxes in GTB

Global Transaction Banking (GTB) provides commercial banking products and services for both corporate clients and financial institutions worldwide, including domestic and cross-border payments, risk management and financing of international trade as well as trust, agency, depositary, custody and related services. GTB comprises Cash Management, Trade Finance and Securities Services.

Throughout 2014, GTB continued to operate successfully under challenging business conditions, including the ongoing slow economic recovery in Europe and low – even negative – interest rates. Furthermore, the transaction banking industry became more competitive, with new providers entering the market and margins subject to compression. Given the global nature of its business, GTB was also exposed to geopolitical risks. The division also had to adapt to regulatory change, which created both challenges and opportunities.

While market conditions were frequently difficult, GTB further invested in growth. Along with expanding business volumes and positive business momentum especially in Asia and the Americas, revenues increased by 2 % compared to 2013. Risk costs decreased in 2014, but the cost/income ratio was slightly higher mainly due to a litigation-related charge and increased regulatory requirements. GTB has nearly doubled its pre-tax profit in two years and reported income before income taxes of € 1.2 billion in 2014 (2013: € 1.1 billion).

Excerpt from segment reporting (Global Transaction Banking1)

Global Transaction Banking recorded income before income taxes of €1.2 billion in 2014, compared to €1.1 billion in the prior year, due to higher revenues and lower provision for credit losses following a single client credit event in 2013. This was partly offset by an increased cost base.

 

 

 

in € m.

2014

2013

Net revenues

4,146

4,069

Total provision for credit losses

156

315

Noninterest expenses

2,791

2,648

Income before income taxes

1,198

1,107

Return on equity (pre-tax) in %

20

22

Risk-weighted assets

43,265

36,811

Assets

106,252

97,240

1 Excerpt from segment reporting. For notes and other detailed information, see Financial Report 2014 (Management Report). Regulatory capital amounts and risk weighted assets are based upon Basel 2.5 rules through Dec 31, 2013 and upon CRR/CRD 4 fully–loaded since Jan 1, 2014.

GTB’s success is founded on a diversified global portfolio – both in terms of product offering and regional balance – and a solution-oriented, volume-driven business model. GTB is present in 49 countries worldwide and services around 47,000 clients – including virtually all EuroStoxx 50 and DAX companies – in more than 190 countries and jurisdictions. The division has established a strong position in attractive growth markets such as China, India and Latin America.

Throughout 2014, GTB’s key strategic priorities included deepening existing client relationships and acquiring new clients as well as investing in client solutions and IT platforms, including the addition of SWIFT MyStandards – an application giving clients direct access to standardized documents in formats such as SWIFT MT Messaging – and the award-winning Autobahn App Market. GTB continued to optimize its business portfolio and global footprint while maintaining a balanced risk/reward profile as well as strict capital and cost discipline. This was underlined in the positive development of the return on equity across the year.

The division maintained a strong focus on cultural change and collaboration with other areas of the bank, including the partnership with Corporate Banking & Securities’ Institutional Client Group and Corporate Banking Coverage. GTB continued the joint venture with Private & Business Clients for medium-sized companies and its cooperation on client referrals with Deutsche AWM.

In 2014, GTB combined the sales and product development units and established a dedicated client coverage function to improve client centricity. As a result, Institutional Cash & Securities Services (ICSS) was created, with a repositioning of the business at a time of significant change across the industry. ICSS reviewed its portfolio and divested its Germany-based registrar services business. ICSS now comprises Institutional Cash Management and Securities Services, which includes the Depositary Receipts business, as well as Trust & Agency Services, Agency Securities Lending, Custody & Clearing and Fund Services.

Strong global footprint

Leader in euro clearing

Leader in euro clearing (bar chart)

GTB maintained its leading position in the Europe, Middle East & Africa (EMEA) region, and continued to grow its franchise in the Americas and Asia Pacific. The division remained the leading euro clearer with a market share of 8.5 % (based on euro payments through the TARGET2 and EBA EURO1 clearing systems) and a top six U. S. dollar clearer with a market share of almost 9 % (based on payments and receipts through the Clearing House Interbank Payment System, CHIPS). During the year, GTB regularly handled daily payments in excess of € 1 trillion. GTB captured growth opportunities in the Americas and Asia. The Americas saw double-digit income growth. In Asia, GTB generated double-digit revenue growth and expanded its product and service offering with Chinese renminbi solutions while establishing a presence in the Shanghai Free Trade Zone. In November, Deutsche Bank effected its first renminbi transaction via Frankfurt’s offshore clearing center.

As a major market participant, GTB remained committed to helping and advising its clients navigate the changing regulatory environment across all areas of the business. GTB assisted its clients in preparing for the Single Euro Payment Area (SEPA), launched in 2014, and progressed well on preparations for the use of the European Central Bank’s TARGET2-Securities (T2S) settlement engine based on the second generation of the European TARGET gross payments settlement system.

Institutional Cash & Securities Services: increased market share

ICSS secured a number of landmark mandates throughout 2014. All business segments grew market share and acquired new clients. ICSS also developed its business in Saudi Arabia, Hong Kong, Shanghai, Australia and Russia.

The depositary receipts business increased its portfolio by more than 25 % in 2014, maintaining its number two global market position. The Trust & Agency Services business gained momentum in the U. S. and worldwide in its escrow solutions unit. GTB maintained its position as a leading provider of custody and clearing globally and continued to grow its leading Agency Securities Lending and Fund Services franchises. These businesses experienced significant revenue and income growth.

Institutional Cash Management expanded across most regions and benefitted from increased deal volumes and higher revenues. It continued to be one of the few global cash management providers for financial institutions, offering cross-currency payment products such as FX4Cash. In 2014, GTB gained a number of major FX4Cash mandates with key clients.

Trade Finance & Cash Management Corporates: improving clients’ payments

Growing trade finance business volumes

Growing trade finance business volumes (bar chart)

Cash Management Corporates (CMC) offers a range of solutions for clients to optimize their treasury and payment businesses and improve cash flow. The business continued to be a market leader in Europe, providing best-in-class solutions supported by service excellence, thought leadership and innovative use of technology.

In 2014, the business continued to pursue a cross-regional strategy with a strong emphasis on multinational corporates as well as the emerging markets. A third of newly-acquired clients came from emerging markets, notably Asia Pacific. The Cash Management Corporates business also made considerable progress in working with payment aggregators and the financial technology (Fintech) sector.

Trade Finance continued to work with its clients at every stage of their trade-related value chain to support foreign trade activities. During the year, Trade Finance closed a number of important transactions with a special emphasis on working capital solutions and the accounts receivable business. Volumes in Trade Finance rose overall by around 15 % in 2014 and increased by 25 % in the financial supply chain business. The business continued to have a leading position in Germany, with a market share in excess of 20 % in export letters of credit. The overall Trade Finance book came to more than € 75 billion.

Outlook

Global Transaction Banking continues to pursue strict cost and risk management discipline to ensure the efficient use of capital and to generate attractive returns, in order to remain a stable pillar with profitable growth in Deutsche Bank Group. In 2015 and beyond, GTB will continue to focus on building and developing client relationships in mature markets as well as driving growth in selected emerging markets. The partnership with other areas of the bank is continuously being expanded to ensure a wider range of clients can benefit from GTB’s products, solutions and services.

Awards 2014

Euromoney
Leading US$ and € provider for Financial Institutions in Western Europe, Central & Eastern Europe, North America and Latin America
Leading International Cash Management Provider for Corporates, Western Europe
Best Transaction Services House in Western Europe

Asiamoney
Best Overall Cash Management in Asia Pacific (voted by large Financial Institutions)

Global Custodian
Agent Banks in Major Markets Survey: 30 “Outperformer” awards in securities services

FImetrix
Distinguished Provider of Transaction Banking Services in € and US$

Greenwich Associates
Quality Leader in Eurozone and Asian Large Corporate Cash Management
Quality Leader in U.S. Large Corporate Trade Finance