The future of Deutsche Bank Global Securities Services (GSS) is now being plotted, apparently by an internal team rather than external advisers, who could probably take a more measured look at what is possible. The team, led by Juergen Fitschen, head of transaction banking, is thought to include Ken Kennedy, John Burgess and Heiko Lotz as well as Paul McNaughton, who succeeded Juergen Marziniak as head of global custody earlier this year. “We are looking at the strategic alternatives for our business as part of normal management processes,” explains a Deutsche Bank spokeswoman. “As soon as there is something to say, we will inform our clients and staff accordingly and I am sure you will hear through your normal channels.”
With no decision imminent, the fate of GSS has become the subject of fevered speculation among competitors. The big question is whether it can or should be sold as a single business or broken into its regional components and sold piecemeal. The answer will depend partly on how quickly Deutsche Bank wishes to rid itself of GSS, but some observers believe a sale of the entire business at other than rock bottom prices is unrealistic. The potential buyers – State Street? Bank of New York? Citibank? JP Morgan? – all have reasons to avoid getting involved. BNY may reason it is garnering US clients of Deutsche anyway; Citibank was turned down by Deutsche as a buyer only last year; and JP Morgan is still wrestling with post-merger integration problems of its own. Which leaves State Street, which might find the old Bankers Trust indexed clients attractive, but will have less interest in the European and Asian businesses.
Which means the German bank is likely to sell the American, European and Asian businesses separately. BNP Paribas is the likeliest buyer of the European pieces, with the WM performance measurement business perhaps going to a third party, though the UK client list (which has remained solid) will attract a broader range of banks (including newcomers KAS Associate and the revivified Clydesdale) looking to gain scale. HSBC and Standard Chartered are the only potential buyers of the Asian business, unless Citibank develops an interest again, and it is hard to see either of them getting hugely excited about buying a business which was built to service sub-custody which is noticeable mainly by its absence. In fact, it is not inconceivable that Deutsche will be left with its Asian operations.