After the announcement that the Dresdner Agency Securities Lending business will be integrated into Deutsche Banks Trust & Securities Services business, GlobalCustodian.com spoke to Tim Smollen, Global Head of Dresdner Banks Agency Lending business (who will remain head of the business), and Roger Harrold, Global Head of Domestic Custody Services, Deutsche Bank.
It would be simple to assume that the Deutsche Bank acquisition is a drive back into securities services after a six-year hiatus. In 2003, State Street completed the acquisition of a substantial part of Deutsche Bank Global Securities Services businesses, most notably substantial parts of Deutsche Bank’s global custody businesses, also acquiring fund administration and Depotbank services, securities lending capabilities, performance measurement and benefit payments services, as well as U.K. and U.S. based domestic custody and securities clearing operations.
However Harrold is keen to press that the Dresdner acquisition is not a precursor towards a move back into fund administration or other parts of securities servicing, but rather a logical addition to Deutsche Bank. Smollen explains: Clearly one of the biggest drivers behind the acquisition is the incredible internal demand for securities and financing in Deutsche Bank, and I think that we are one of he perfect vehicles to help fill that hole. So we see incredible synergies between internal demand and the supply we can bring.
Harrold is also keen to make the point that Deutsche Bank is also a broker dealer, and has agreed to keep that part of the business separate from the incoming securities lending business.
One immediate area that the securities lending team will look into once settled at Deutsche bank is the expansion into regional markets. Smollen continues: Deutsche Bank are a big domestic custodian clearer in many markets of the world, and many of those markets would like a local lending service. This something that we are going to explore very, very quickly. The time seems to be right.
Harrold concurs, stating that going forward there are a lot of markets that are increasingly focused on bringing these types of services onshore.
The details regarding keeping technology and personnel have yet to be decided.
According to Smollen: Every time you do a transaction like this you look for upgrades and efficiencies, so we have a very open mind as we migrate the team. We will see if we can upgrade our technology and staff. But we wont know about staffing levels until we get through the whole migration.
The move of Dresdner Agency Securities Lending business to Deutsche Bank is a complete airlift of the business from one firm to the other. As Deutsche Bank doesnt have an agency securities lending group, our plan at this point is to move all three locations (London, NY and Frankfurt), finishing some time in the fourth quarter.
Smollen concludes: In the past the last seven years we have been developing what we think is arguably the most sophisticated technology in our business, and thats really the driver for a lot of the bespoke customized lending solutions that we give our clients. Our strategy here has always been to focus on a small number of institutional clients.
Giles TurnerNews Editor