GC Friday Interview: Thibaud de Maintenant, Deutsche Bank’s Global Head of Direct Securities Services, Global Transaction Banking

Since 2000, Thibaud de Maintenant has been with Deutsche Bank, and he spent his early years at the company building the firm’s sub-custody network across Europe. In 2011, he became global head of Direct Securities Services (DSS), the securities lending, custody, clearing and fund services arm of Deutsche’s Global Transaction Banking division. While he is responsible for a wide range of securities services, de Maintenant’s experience in Europe, as well as his time spent as head of DSS Asia Pacific, has positioned him to lead the business unit in a challenging, changing environment

What is the strategy for Direct Securities Services in 2014? Do you have a particular area you would like to focus on?

TdM: We’ve grown this year – both in terms of market share and number of clients across all products. This is as true on the agency securities lending side as it is in custody, clearing and fund services. We’ve undertaken some very large migration of assets in Asia and Europe, as well as adding some large clients around the globe for agency securities lending (where, in the US, we’ve recently taken on the Connecticut Retirement Plans and Trusts Funds, the Tennessee Consolidated Retirement System and the Texas Municipal Retirement System) and fund services. So, given the current environment, as you can imagine, we are very pleased with a growing market share and positive P&L.

As a result, when we look to 2014, our goal is to continue in the same vein; we’re planning for further sustainable growth across all of our businesses.

On the custody and clearing side, it’s a case of keeping up the momentum we’ve built in 2013 in terms of growing market share. We are one of only two custodians that are directly connected to CSDs across both Europe and Asia. This gives us unique perspectives and enables us to offer valuable insights to our clients. We’re keen to leverage that. We will continue to invest in our people and infrastructure with T2S the most obvious example: EUR 30 million over the course of the project. And of course we’ll continue to bring new innovations to market. dbIntegrate is just one example of this: it provides an integrated solution from execution through to custody and is the result of bank-wide collaboration. It delivers significant improvement in terms of efficiency in settlement and netting.

On the agency securities lending side, we have a very firm approach to risk management which got us safely through the crisis without issue. Most of our conversations with clients now are about how we approach risk, and why we have been successful through the crisis. They’re keen to benefit from that and we’ll continue to help them do so.

In fund services, we’re definitely very active on the alternatives side, especially in real estate and private equity. We’ve been strengthening our team and building our operating model. You’ll see us put a lot of focus in the U.S. next year.

And the last bit of our strategy is on the domestic fund services, locally domiciled funds, especially in emerging markets. We have built a strong presence there which we will be actively defending next year.

What’s unique about DSS? What advantage do you have over your competitors?
TdM: We’re unique in a few ways. The first is that we’re part of the Global Transaction Banking (GTB) division, one of the four organizational pillars of Deutsche Bank. There is a lot of focus and support from senior management – including the will to invest for grown – for GTB. And DSS is a large part of GTB. So, we benefit from the large resource allocation.

The second is that we are the number one Euro clearer. We can move cash better than anybody else, and that bodes very well for us with T2S in terms of moving securities in Europe and providing liquidity management to our clients.

Another differentiator is that we don’t compete with our clients. Global custodians are more and more willing to extend their relationships with agents like Deutsche Bank who focus exclusively on delivering the best sub-custody services and don’t compete with them in the global custody arena.

The last point worth mentioning I think is our lending model. We recent launched agency securities lending without custody, and also have a proven track record in terms of risk management during a crisis. So clearly that’s very unique to have such a great history, especially at such a testing time.

What was the reasoning behind creating the non-custodial agency securities lending? Why not link it to custody?
TdM: Our securities lending business is actually geared to support both custody and non-custody clients. What we found over time – and probably ahead of some our competition – is that some of our clients preferred to separate lending from custody. So basically what we built is something very unique where we are putting out a platform that can support lending from literally any custodian, so we have a link with all the global custodians on the planet, and we know how to move securities for lending without being the custodian.

We can also offer custody with lending, but it’s not always what the client wants. Different clients in different parts of the world, have very different needs. For example, in the U.S. most of our clients are non-custody clients, but in the Middle East or Europe, more people will prefer to do custody and lending together. So it’s great to be able to cater to all.

With regulation such as T2S and OTC derivatives clearing coming to Europe, how will that affect your business?

TdM: T2S – which, to be completely accurate, isn’t regulation but an ECB-driven initiative – will fundamentally change how we and everyone else in the post-trade landscape in Europe connects with CSDs. So, it’s a huge change. We are building our T2S offering using a state-of-the-art technical connectivity hub in Frankfurt. As a compliment to that, we keep the local market expertise, particularly around corporate actions and regulator access. So it’s a good mix of benefitting from the hub solution as we move from custody settlement, but as well keeping on the asset services the deep local expertise.

This approach balances the economies of scale from consolidated settlement volumes whilst leveraging the local market expertise that is at the heart of Deutsche Bank’s DNA. Our overall T2S service is bespoke, flexible and complete. It is built around our clients’ needs, follows a consultative approach and uses tailored modules that offer a best in class service. It’s quite a large investment, and not many sub-custodians will be able to offer the full range of services, so we look at that as a great test for the market.

On the OTC derivatives clearing side, I think for us it’s really about putting together different uses of collateral for investors. We want to ensure that collateral is in the right place at the right time. As the biggest Euro cash clearer, we are in a great position to help clients with their liquidity and collateral management.