Deutsche Bank’s barely hiring, barely firing in the investment bank

Pipelines in investment banking are a complicated thing. As Jamie Dimon, CEO of JPMorgan, noted last week, they can “grow and shrink” rapidly and unpredictably according to geopolitical events. Deutsche Bank’s new investment bankers were caught with shrinkage in the second quarter. Deals that were supposed to happen, didn’t. 

Deutsche Bank said today that there was “uncertainty” in some of its key sectors for M&A and that as a result “material transactions” in its pipeline were postponed to the second half of this year. The German bank isn’t alone in this: US banks have been saying the same, but it does look a bit awkward for all the new bankers Deutsche has hired. 

Financial News reported in January that Deutsche added over 115 bankers in 2024, of whom 30 were managing directors (MDs). The Financial Times reported in July 2024 that Deutsche Bank also added 125 bankers in 2023, of whom 75 were at MD level, plus another 300 from Numis. It’s understood that Deutsche started with 40% fewer vice presidents and MDs than rivals, but it’s still been a big build.  

M&A revenues have responded, but probably not by as much as you’d like after spending £410m on Numis and another £200m or more on senior bankers. As the chart below shows, M&A revenues were just €140m ($165m) at Deutsche Bank in the second quarter. This was inconsequential alongside the €2bn+ Deutsche earned trading fixed income currencies and commodities (FICC).

Within FICC, it was Deutsche’s FX traders who outperformed in Q2. However, there seem to have been some hiccups. The chart below from today’s presentation, shows some large trading loss days at the start of the quarter, followed by some bigger profit days towards the end. 

 Viewed in the context of the first half as a whole, Deutsche’s M&A bankers haven’t done badly this year. However, as the chart below shows – they haven’t done well either. At best, they have held their own against Goldman and JPMorgan in revenue terms. Deutsche’s debt capital markets (DCM) bankers have fared worse, as the leveraged finance business floundered. 

What does this mean for Deutsche Bank’s jobs and bonuses? There’s no mention yet today of the “strategic review of the entire workforce” promised by CEO Christian Sewing earlier this year. Instead, Deutsche Bank says it’s 90% of the way through its cost savings program and has saved €2.2bn to date.  It plans to keep saving by optimizing non-client facing roles. It also plans to keep investing in the US flow trading business.

In the meantime, compensation spending is up 7% and headcount is almost static in Deutsche’s investment bank. Deutsche cut a net of 36 people from its 4,876 front office bankers and traders in the second quarter. It also cut a net 25 people from the 3,149 people in its back office over the same period. To the extent that Deutsche is hiring at all, it’s pretty much one in and one out. But if you’re still employed at the end of the year, you might get paid – particularly in FX.

These are the actions of a bank in wait and see mode. Investment bankers need to hope their pipeline comes through, soon.

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