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Deutsche Bank (DB) Beefs Up M&A Team Despite Deal Drought

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In stark contrast to investment banking giants eliminating jobs amid the global dealmaking slump, Deutsche Bank AG (DB - Free Report) is eyeing the expansion of its mergers and acquisitions (M&A) team. In addition to inorganic efforts, the company has been active on the hiring front.

Particularly, Fabrizio Campelli, overseeing DB’s investment bank (IB) and the commercial banking division, said, “We have hired close to 50 industry coverage deal makers and product experts since the start of the year to target growth in strategic revenues as the market rebounds for deal activity.”

The company has hired veterans from peers in the past few months. With an aim to boost its ranking and take advantage of the market dislocation in the IB space, it is likely to continue beefing up its M&A team in the upcoming period.

As the company prepares to benefit from the anticipated dealmaking rebound, it is “making investments in technology, selective hiring and additional growth initiatives” in capital-light IB businesses such as M&A advisory.

In line with this, in late April, the German lender announced an agreement to acquire Numis Corporation Plc., a preeminent U.K. corporate broking and advisory house firm, in a deal valued at £410 million. 

Similar to the fourth quarter of 2022, the overall IB business performance was weak in first-quarter 2023. Global mergers and acquisitions hit rock bottom in more than a decade in the first quarter of 2023, while volumes for initial public offerings reached the lowest level since 2019.

A host of factors, such as geopolitical tensions, inflation, rising interest rates and fears of a global recession, acted as headwinds for mergers and acquisitions. Thus, deal volume and total deal value numbers crashed in the quarter. For the same reasons, IPOs and follow-up equity issuances dried up. Bond issuance volume witnessed a decline, too, as investors turned pessimistic.

With little sign of a trend reversal in the near term, we estimate DB’s IB revenues to be up 1% to €10,113.2 in 2023. For the ongoing year, the company expects IB revenues to be essentially flat.

Over the past year, shares of DB have declined 4.8% on the NYSE compared with the industry’s fall of 3%.


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Currently, DB carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Amid the muted dealmaking conditions, Wall Street firms, including Bank of America (BAC - Free Report) and Morgan Stanley (MS - Free Report) , have been taking steps to trim their IB and wealth management divisions.

Last week, it was reported that Bank of America intended to eliminate 40 positions in its Asia region’s IB unit. Of the affected employees, the majority are based out of Hong Kong, with a particular emphasis on China, and hold junior positions, per people familiar with the matter. BAC’s latest redeployment strategy aims to serve as a temporary measure in response to the dealmaking scarcity and slowdown in China’s economy.

Earlier this month, it was reported that Morgan Stanley would initiate another round of job cuts and decided to lay off 3,000 jobs in the second quarter of 2023, according to a source familiar with the matter. Of this, MS is considering cutting 7% of jobs in the Asia-Pacific region (excluding Japan). Last year, MS slashed roughly 50 IB jobs in the Asia-Pacific region, with a large number being China-focused positions. 

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