DEUTSCHE BANK STILL STRUGGLES AS IT TRY TO RECOVER | Marvin Germo

DEUTSCHE BANK STILL STRUGGLES AS IT TRY TO RECOVER

By: Marvin Germo | August 21, 2019

Plan To Recover

Zalando, considered as an online retailer and a fast-growing business based in Germany with big foreign expansion plans is what Deutsche Bank needs right now in order to recover from its challenges and current losses. This international bank is trying to pull back from investment banking to rebuild its corporate division by strengthening its relationship with existing clients and attracting more other than its usual blue-chip customers. The bank has also tried to offer Zalando something to benefit the two parties. Let’s take a look at how the online retailer responded to this offer.

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Offer To Zalando

Deutsche offered Zalando to hold more of its cash without fees. The bank tried to expand its business with the famous online shop by taking away the charge fee for safekeeping more of its cash. However, although this is a good offer, Zalando declined. This firm has generated €5 billion or equivalent to $5.6 billion worth of revenues already in a span of 11 years since it started its operation. And it wants to continue spreading out the risk by depositing its cash to different institutions even with charge fees. It seems like Zalando doesn’t want to increase the risks it’s already facing, thus, this answers why it declined the bank’s offer.

Bigger Risks With Deutsche

Zalando disclosed that while Deutsche is a pertinent bank, it still sees the possible risks doing business with it. The company is trying to mitigate the risk it is facing and accepting the bank’s offer won’t be a help. Zalando’s position in the offer indicates that it could be a tough spot for the bank whose target is to do corporate banking solely just like when it first operated in 1870. 20 year ago, the bank started its unsuccessful and costly aim to be the trading powerhouse of Wall Street and since then, a lot of changes happened in the domestic market already. Many domestic and foreign banks have entered the market while Deutsche is busy with its global investment banking goals. Now, the German market is jammed.

Deutsche’s Competition

Commerzbank and HVB, a known German financial institution and a subsidiary of UniCredit of Italy, have been chasing large and small corporate clients for a while now and both are hiring more senior bankers for an extra push for the business. Meanwhile, international banks such as Morgan Stanley, JPMorgan, and Goldman Sachs have been creating progress to attract more local clients. Standard Chartered also built its branch just across the street from Deutsche with an objective to bring in more German clients. Since the financial crisis, German companies are trying to do business with multiple financial institutions, making it harder for Deutsche to rebuild itself.

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