when risk and regulation is gettinger to navigate, can deutsche bank keep up the pace?
joining me, head of deutsche bank's corporate and investment bank and he will take over as co-ceo of the company this june. good to see you. good to be here. we look forward to you taking on a new role at the bank.
i want it ask you about the conference today. a lot of buzz going on.
30 this morning reaffirming the company's risk business. what can you tell us about the sentiment of bank stocks and what about the jimmy dimon talk?
we had 00 people there.
600 investors, 300 investors, 20% of the world's total market cap. and a sector absolutely at the heart of everyone's attention.
it looks like investors want a reason to by these stocks because of the value that they present.
but there aresome head winds in the way right now. there is a lot of questions to answer and hopefully our conference went a long way towards answering them and yes, the sector is trading at value which is one of the things that makes it very interesting.
let me ask you about europe. that is one of the big concerns on the part of investors. on friday we heard $316 million come out 6 deposits. are you seeing any kind of run on the banks.
where would you say is the sentiment right now in terms of the european banks and how much more capital needs to be raised?
oh, i wouldn't say we are anywhere close to talking about runs on banks, maria. i think it isy important when you look at europe to take a broader view and all of that has been done in the last six months.
if i was sitting here six months ago, we didn't have lto, size of the monitor is much smaller. undoubtedly the situation in greece is creating worry. and it is legitimately a source of concern. but i wouldn't nearly talk about runs on banks. but of course, you know, moody's began the long awaited downgrade of globe at banksastweek. we still see such pressure there.
cutting the 26 italian lenders.
i would say the relish in europe is all about sovereign debt. it start with greece.
i would say away from greece we have a pretty encouragi situation. so italy, government in spain, portugal, ireland, made tremendous progress towards significant reform. so really, the real issue is the what the resolution to greece would be.
if we can get through that, a big if, i think there is reason to be long-term optimistic about europe. what are you expecting out of basal 3?
are you at this point ready?
are you still in capital raising mode at deutsche bank?
deutsche bank is fine.
we have a capital ratio exactly where we with like it to be.
10% crd3 which is considerably higher than where we are required to be at this point, maria.
basal 3 is done.
we know what the rules will be. there is a straight forward set of rules which we need to adhere to and we are highly confident we can get to all of our targets without raising capital. so you are not seeing the uncertainty that other bank executives, certainly in the ited states are sai seeing, where we are unclear about the volcker rule, unsure about how it shakes out.
let's not forget deutsche bank is one of the leading banks this this country. 11,000 employees.
20 locations. we are a leading foreign exchange currency house in this country. all of the rules which you just talked about are highly relevant for our franchise as well. exactly where we find up with the volcker rule. it is as much interest for deutsche bank as for any of the u.s. majors.
how do you see the company changing in a couple of years given this new set of regulations we will be seeing. business, you said the most important or incredibly critical to everall bank. 11,000 people in the united states. how does the bank change.
how does that business change in coming years?
given the regulatory backdrop?
if you look at investment banking sector, four sets of change is coming. very quickly, capitots more, liquidity, we havemore. business model, much neyorer. and ability to move capital between centers. much harder. all four will be big challenges.
but frankly for us, at deutsche bank, that's an opy to challenge the status quo and cement it it as one of the leading in the world. what changes will you make two years out?
are you done cutting expenses?
are you still in cutting mode?
how do you grow?
we are happy with our u.s. franchise. it took us a long time but finally two years ago we became number one fixed income. we are on the verge of cracking into the top five on equities. we made tremendous progress in fie finance. we have to keep growing and growing selectively, and efficiently, i should say.
what is your take of what happened at j.p. morgan?
i know jamie dimon spoke today.
are we going to see thisind of significant loss elsewhere?
what was your reaction?
gym jamie did a terrific job this morning. it is way too early to most mortem and draw conclusions. we will learn more as the days go by.
jamie was very forthright as he characteristically is, in talking about from his vantage i think it is crucial for banks to recover. it is important we restore credibility, which has been so damaged the last five years.
how do you do that, anshu?
that's the million dollar question or so?
how do you getnt changed ?
i think in many ways we have taken a lot of the steps that needed to be taken. we needed to be better capitalize. we needed more liquidity.
we needed to be more focused on client and not make egregious mistakes.
some accomplishment of that for a long what is required. but i don't think there are any easy answers.
i think we did in some ways wined up letting a lot of people down as an industry, now we have to make up for that. it nerms terms of allocating capital, we heard in terms of stress tests, that industry would be able to start paying back shareholders.
what are your plans in terms of buy backs and dividends?
at deutsche bank, as i have said, we are very much in capital accretion mode. we want to be sure we hit our targets in short run. but at this point, it is capital accretion.
organic capital accretion.
organic growth. are there assets that look favorable to you in europe or elsewhere in the world given the trouble and the upset around the banking sector that perhaps are good valuations?
i think you have to keep an eye on events and feel comfortable to the possibility of extreme event is not very high, to start venturing forth and buying assets on an opportunistic basis. while equities look reasonably val i'd, credit spreads look wide given how low the nominal interest rates are.
we are constructive in many classes but are we looking to accumulate assets?
that's really not our model. we are looking to service our clients as do as much flow that we possibly can. where is deutsche going to be in the coming years.
we think we can do better. in terms of products. in terms of geographies, this country here, do more in the u.s. more in the u.s.
there is not combinations to see happening?
it is all organic. all organic. we bought post bank in germany which was crucial for us. it is the dominant retail player.
in our home market, let me say the importance of the home market is greater now than it's ever been before. sorry. you please go i a ahead. i was going to say, there was a time when floated above countries. you didn't look at nationality. at this point, country of origin is more important than before. so for us to get it right in the home market and emerge in home markets and u.s.
those are the three priorities. does greece leaving the you're why impact the bank?
first of all, it is in no one's interest for greece to leave the euro. i don't think it is in the best interest of greece either for that to happen. in the eve scenario like that were to unfold, the question you need to ask yourself, which mode of departure would it be?
uncontrolled and rapid devaluation or orderly?
in the latter case, i could imagine, a nondisruptive way of moving on. clearly, there is a risk event associated with a dramatic devaluation. which frankly, we don't foresee.
anshu, good to have you on the program. loverly to see you. incoming ceo at deutsche bank.