Deutsche Bank’s inconvenient truth
Germany Inc’s oncesolid allegiance to the lender is waning after years of crises
As Deutsche Bank AG approaches its 150th anniversary, Germany’s biggest lender is facing an inconvenient truth: it is no longer irreplaceable for the country’s economic elite.
From corporate giants to specialist engineering firms, Germany Inc’s once-solid allegiance to Deutsche Bank is waning after years of crises stemming from efforts to emulate Wall Street investment banks, according to discussions with numerous executives.
“I feel genuine regret for the decline of this once so proud and trusted institution,” said Reinhold Wuerth, the 83-yearold billionaire and patriarch of building-materials maker Wuerth Group. But those woes “hardly influence our business, as there are all kinds of banking services available in the European Union,” said Wuerth, an elder statesman of the country’s vaunted Mittelstand of small- and medium-sized companies, which make up the backbone of the economy. ■
More so than in the past, German Mittelstand companies today have a wide array of financing options, and more foreign lenders are pushing into the market. Meanwhile, Deutsche Bank’s share of the German loan market has dropped, falling to sixth place this year from first as recently as 2015.
A decade ago, Deutsche Bank was one of the world’s foremost investment banks after a stunning rise from regional lender to global player. But that started crumbling as the aftermath of the financial crisis exposed dubious deal-making, leading to crushing fines.
Deutsche Bank’s defenders warn against taking the current environment for granted. A deterioration in the country’s benign economic picture could prompt some foreign banks to ditch the German market, leaving Mittelstand companies starved for credit when they need it most.
Despite its current woes, Wuerth — who took over the family business at the age of 19 and built it into a global enterprise with 76,000 employees — believes “clever management” can return Deutsche Bank to health, even if the process is “painful.”