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Why Deutsche Bank Told Clients to Stay Away From American Banks

Challenged bank faces growing competitive threat from U.S.

It's always fascinating to observe how Americans are perceived by people from other places  -- depending on the country and the circumstances, common stereotypes range from unhealthy food to cut-throat capitalism and being a workaholic.

In the world of banking, the reputation is also not particularly rosy but of a system that will lure you in with a better rate and then drop you when the economy turns or you're no longer needed. That was the accusation levied by at least one European bank that warning clients against borrowing from Americans.

"A number of European corporates are already realizing the risks of not operating with companies that are long-term committed to the geographies [...] in which they operate," Fabrizio Campelli, a Deutsche Bank board member overseeing corporate and investment banking, told Reuters in an interview.

With total assets of $1,476 billion in 2021, Frankfurt-based Deutsche Bank  (DB) - Get Free Report is currently just past the 20 largest banks of the world but far behind American behemoths like JP Morgan Chase  (JPM) - Get Free Report and Bank of America  (BACXL)  as well as French BNP Paribas  (BNPQF) .

Corporate Speak: 'They Don't Love You Like We Do'

While Campelli uses corporate jargon speak and very carefully avoids ever mentioning specific names like Chase or Goldman Sachs, his message of "fickle and profit-driven American banks vs. stable and loyal German banks" still shines through very clearly.

"There was evidence of non-German banks in this country taking lending off the table while German banks were going longer-credit during the pandemic in 2020." 

He further added that American banks "tend to flex lending up and down depending on circumstances."

This advice is hardly revelatory as banks will always fight to keep as much of their clients' money as possible. The fight is particularly acute in Germany. According to Dealogic data compiled for Reuters, the share of loans given to German companies by the big five of American banking (JPMorgan, Bank of America, Morgan Stanley  (MS) - Get Free Report, Goldman Sachs and Citigroup  (C) - Get Free Report) rose from 18% to 35% in the last 10 years.

The Ongoing Fight For Wealthy Corporate Clients

That means, in other words, that German banks are losing valuable customers and loan payments that could instead be going to them. While the fight against U.S. banks increasing their presence in Germany and poaching wealthy corporate clients dates back years, Deutsche Bank has recently amped up its "stay local" message.

At a banking conference on Nov. 18, Deutsche Bank Chief Executive Christian Sewing warned of the "danger" of relying on foreign lenders.

"We urgently need to change course here if we do not want to rely primarily on foreign banks to finance Europe's future," Sewing said. "And nobody should take this danger lightly."

The heads of European divisions of American banks have largely dismissed these claims. Stefan Behr of JPMorgan's European operations, told Reuters that "many of the German banks work with us on deals as well as us being a banking partner to them."

Perhaps the insecurity comes from the fact that Deutsche Bank has faced a host of struggles in recent years. In October, corporate headquarters and the home of a former co-chief executive were raided in a tax probe while a recent quarter was the bank's worst since the financial crisis. 

The bank also had extensive dealings with former president Donald Trump. 

Trump allegedly provided fraudulent documents to the bank to obtain favorable loans, according to the New York Attorney General's office charges against the former president and the Trump Organization.

Deutsche Bank shares are down 11.85% year-over-year and over 43% since 2017.