Barclays, Deutsche Bank paths diverge as Sewing plots retreat

Bloomberg

Deutsche Bank AG is retreating from its Wall Street rivals. Barclays Plc still thinks it can take them on. The paths of two of Europe’s biggest investment banks are diverging after trading revenue slumped 17 percent at Deutsche Bank in the first quarter and climbed 8 percent at Barclays. The German lender outlined plans to retrench on Wall Street, while its British rival boasted of a performance that was “more than double the average of the US investment banks.”
“We’ve clearly gained market share in the markets business,” Barclays Chief Executive Officer Jes Staley said in an interview with Bloomberg TV. “It’s one of the most profitable quarters we’ve had in corporate and investment banking.”
Both firms have undergone revamps and strategy reversals since the financial crisis as they struggled to adapt their investment banks to an era of tougher regulation and lower risk-taking. That strain led to the ouster of John Cryan as CEO of Deutsche Bank this month and the installation of retail-banking veteran Christian Sewing, who’s scaling back the firm’s global ambitions. By contrast, Staley views this quarter’s performance as vindication of a business that he’s repeatedly defended, even as it often underperformed.
“It’s very much a tale of two halves in European investment banking,” said Gildas Surry, who helps oversee 1.3 billion euros ($1.6 billion) at Axiom Alternative Investments in London, including Barclays and Deutsche Bank bonds. “It shows how management and leadership remains key in investment banking in order to deliver results and loyalty.”
Total revenue from trading and investment banking at Deutsche Bank fell 13 percent from a year earlier to 3.8 billion euros, while the division’s return on tangible equity, a key measure of profitability, fell to 1.5 percent from 5.6 percent.