1 00:00:00,200 --> 00:00:02,800 Speaker 1: I am here with Christian Saving, who is CEO and 2 00:00:02,880 --> 00:00:06,440 Speaker 1: chair of Deutsche Bank, Germany's biggest lender, here in. 3 00:00:06,519 --> 00:00:07,240 Speaker 2: Washington, d C. 4 00:00:07,480 --> 00:00:10,840 Speaker 1: For the IIF, the IMF, the IRF, and everything else 5 00:00:10,880 --> 00:00:11,440 Speaker 1: under the sun. 6 00:00:11,680 --> 00:00:12,400 Speaker 2: Christin, thank you. 7 00:00:12,360 --> 00:00:14,159 Speaker 1: So much for being here. It's really a treat to 8 00:00:14,200 --> 00:00:16,239 Speaker 1: speak with you. And I want to go over a 9 00:00:16,239 --> 00:00:18,360 Speaker 1: couple of the big themes that we see this week. 10 00:00:18,480 --> 00:00:23,600 Speaker 1: The US election, the growing divide between US and European economies. 11 00:00:23,000 --> 00:00:24,440 Speaker 2: And geopolitical risks. 12 00:00:24,480 --> 00:00:26,800 Speaker 1: And I want to start with the US election. How 13 00:00:26,840 --> 00:00:31,480 Speaker 1: different is it between US and European bank officials when 14 00:00:31,480 --> 00:00:32,800 Speaker 1: they talk about the US election. 15 00:00:34,800 --> 00:00:38,040 Speaker 3: I think there is not so much difference. Obviously, we 16 00:00:38,080 --> 00:00:40,080 Speaker 3: are all observing it. I mean, we had a year 17 00:00:40,479 --> 00:00:44,560 Speaker 3: of elections throughout the world. Half of the world's population 18 00:00:45,560 --> 00:00:48,920 Speaker 3: went to elections, so obviously everybody is focused on this one. 19 00:00:49,640 --> 00:00:53,240 Speaker 3: I think from a European or German point of view, 20 00:00:53,479 --> 00:00:56,320 Speaker 3: it is in particular we are all focusing on what 21 00:00:56,480 --> 00:00:59,160 Speaker 3: happens and what is the impact on the economic development, 22 00:00:59,160 --> 00:01:02,280 Speaker 3: and in particular with we got to trade and tariff 23 00:01:03,320 --> 00:01:06,040 Speaker 3: and in this regard there is obviously a lot of 24 00:01:06,120 --> 00:01:11,240 Speaker 3: discussions and in Europe I'm always telling my clients, irrespective 25 00:01:11,280 --> 00:01:13,880 Speaker 3: of the outcome, we all need to take into account 26 00:01:13,880 --> 00:01:16,720 Speaker 3: that we have seen so many changes from a geopolitical 27 00:01:16,760 --> 00:01:18,919 Speaker 3: point of view over the last five to six years 28 00:01:19,560 --> 00:01:23,200 Speaker 3: that we need to adapt either way, and it means 29 00:01:23,240 --> 00:01:26,200 Speaker 3: that actually Europe needs to work on its home market. 30 00:01:26,600 --> 00:01:28,920 Speaker 3: We need to make sure that our home market is 31 00:01:29,080 --> 00:01:31,920 Speaker 3: becoming bigger, that we are really living one home market 32 00:01:31,959 --> 00:01:35,120 Speaker 3: in Europe in order to be actually strong enough to 33 00:01:35,200 --> 00:01:39,840 Speaker 3: compete with the US. Maybe that under present Trump, obviously 34 00:01:40,120 --> 00:01:42,520 Speaker 3: from a tariff point of view, the situation will be 35 00:01:42,840 --> 00:01:46,119 Speaker 3: even more challenging for europe In corporates. But we need 36 00:01:46,160 --> 00:01:48,000 Speaker 3: to take the right steps right now. We need to 37 00:01:48,000 --> 00:01:52,480 Speaker 3: prepare and therefore not only watching, but making sure that 38 00:01:52,560 --> 00:01:55,080 Speaker 3: we adopt. I think that is the right solution and 39 00:01:55,160 --> 00:01:57,400 Speaker 3: that is the advice we as a bank give to 40 00:01:57,440 --> 00:01:58,040 Speaker 3: our clients. 41 00:01:58,240 --> 00:02:01,520 Speaker 1: Do you see any signs that there is a willingness 42 00:02:01,640 --> 00:02:05,480 Speaker 1: or ability of people, particularly in Germany to adapt at 43 00:02:05,520 --> 00:02:08,120 Speaker 1: a time where there's a real question about the main industry, 44 00:02:08,360 --> 00:02:10,959 Speaker 1: which is auto manufacturing and competition from China. 45 00:02:12,400 --> 00:02:14,800 Speaker 3: Look, it looks potentially from the outside that there is 46 00:02:14,840 --> 00:02:18,960 Speaker 3: no willingness and that the urgency is not understood but 47 00:02:19,000 --> 00:02:22,320 Speaker 3: I can tell you the willingness and also the understanding 48 00:02:22,360 --> 00:02:25,519 Speaker 3: is clearly there. And obviously reports like the drug Ed report, 49 00:02:25,560 --> 00:02:28,840 Speaker 3: but also the Letter Report earlier this year are helping. 50 00:02:28,960 --> 00:02:32,400 Speaker 3: Now we have a complicated system in Europe with twenty 51 00:02:32,440 --> 00:02:36,560 Speaker 3: seven member states, and obviously it takes time, but I 52 00:02:36,560 --> 00:02:39,280 Speaker 3: would say that the understanding in Europe that we need 53 00:02:39,320 --> 00:02:43,120 Speaker 3: to move, that we need to rethink the way we 54 00:02:43,160 --> 00:02:46,280 Speaker 3: are defining our European home market, that we need to 55 00:02:46,400 --> 00:02:49,880 Speaker 3: think about what can we do about energy prices being 56 00:02:49,960 --> 00:02:53,000 Speaker 3: competitive in this regard, that we need to think about 57 00:02:53,720 --> 00:02:57,880 Speaker 3: actually reducing bureaucracies in order to allow investments. And finally, 58 00:02:57,919 --> 00:03:01,959 Speaker 3: and in this regard, I'm actually quite optimistic. The tone 59 00:03:02,000 --> 00:03:05,359 Speaker 3: when you think about also the financial industry, the criticality 60 00:03:05,400 --> 00:03:08,320 Speaker 3: of the financial industry, that Capital Markets Union is now 61 00:03:08,360 --> 00:03:11,320 Speaker 3: on top of the agenda of Brussels, but also of 62 00:03:11,440 --> 00:03:16,360 Speaker 3: the main European countries tells me that the message is understood. 63 00:03:16,440 --> 00:03:18,840 Speaker 2: Of course, we all wish that we execute quicker. 64 00:03:19,000 --> 00:03:21,880 Speaker 1: Okay, so let's go there. You're talking about the unification 65 00:03:22,240 --> 00:03:25,640 Speaker 1: of financial union at the same time that there was 66 00:03:25,880 --> 00:03:28,600 Speaker 1: a lot of dissent from German regulators about the idea 67 00:03:28,600 --> 00:03:31,799 Speaker 1: of uncredit buying Commerce Bank and a real question about 68 00:03:31,800 --> 00:03:32,840 Speaker 1: whether that could go through. 69 00:03:32,880 --> 00:03:33,840 Speaker 2: Do you think that there. 70 00:03:33,800 --> 00:03:37,720 Speaker 1: Is a necessity for consolidation in the European banking sector 71 00:03:37,760 --> 00:03:38,480 Speaker 1: in order. 72 00:03:38,600 --> 00:03:41,760 Speaker 3: For that strength to really happen In general, I think 73 00:03:41,880 --> 00:03:44,600 Speaker 3: yes there is, and we always said that. I have 74 00:03:44,720 --> 00:03:47,000 Speaker 3: said that for the last six years that if we 75 00:03:47,040 --> 00:03:51,520 Speaker 3: think about the European banking environment and the banking industry, 76 00:03:52,520 --> 00:03:55,440 Speaker 3: we are kind of overbanked if you think about what 77 00:03:55,560 --> 00:03:59,000 Speaker 3: is really needed when we think about the future, lots 78 00:03:59,040 --> 00:04:02,760 Speaker 3: of investments into technology, if you think about the regulatory environment, 79 00:04:03,320 --> 00:04:07,160 Speaker 3: I do believe that scale is important. But we also 80 00:04:07,200 --> 00:04:09,760 Speaker 3: always said from a Deutsche Bank point of view, first 81 00:04:09,800 --> 00:04:12,840 Speaker 3: of all, some preconditions also on the regulatory side needs 82 00:04:12,840 --> 00:04:16,760 Speaker 3: to be done. Sometimes, at least in where we are 83 00:04:16,839 --> 00:04:21,520 Speaker 3: right now, sort of say, consolidation is not that easy 84 00:04:22,240 --> 00:04:25,040 Speaker 3: from a regulatory point of view where we stand not 85 00:04:25,160 --> 00:04:28,719 Speaker 3: finalized banking union and so on. And from a Deutsche 86 00:04:28,720 --> 00:04:30,400 Speaker 3: Bank point of view, we always said, look, we have 87 00:04:30,400 --> 00:04:33,320 Speaker 3: a clear strategy for twenty twenty five. We want to 88 00:04:33,320 --> 00:04:35,200 Speaker 3: increase our return on equity and we are on a 89 00:04:35,320 --> 00:04:38,400 Speaker 3: very good way to above ten percent, and therefore we 90 00:04:38,440 --> 00:04:42,479 Speaker 3: are focusing on ourselves, but industry wide it must come 91 00:04:42,520 --> 00:04:44,039 Speaker 3: and it will come over the next years. 92 00:04:44,120 --> 00:04:45,880 Speaker 1: Do you think that that there would be a much 93 00:04:45,960 --> 00:04:49,359 Speaker 1: bigger competitive advantage for Deutsche Bank to be a bigger bank, 94 00:04:49,680 --> 00:04:53,479 Speaker 1: especially when facing off with the JP Morgans and the 95 00:04:53,520 --> 00:04:55,599 Speaker 1: Bank of Americas and the city groups of the world. 96 00:04:55,920 --> 00:04:58,240 Speaker 3: Well, first of all, I'm very proud that in those 97 00:04:58,279 --> 00:05:01,440 Speaker 3: businesses where we are today we can phase off also 98 00:05:01,480 --> 00:05:03,839 Speaker 3: the American banks and we have a good market share 99 00:05:04,080 --> 00:05:06,719 Speaker 3: if you think about the fig business and the investment 100 00:05:06,760 --> 00:05:09,919 Speaker 3: banking in the corporate bank. Honestly, we are among the 101 00:05:09,960 --> 00:05:11,360 Speaker 3: top banks, and I'm really. 102 00:05:11,160 --> 00:05:13,200 Speaker 2: Proud where we focus on. 103 00:05:13,640 --> 00:05:17,560 Speaker 3: We are among the leaders. And you know, it's all 104 00:05:17,600 --> 00:05:20,040 Speaker 3: a matter of time. But for the time being and 105 00:05:20,120 --> 00:05:24,360 Speaker 3: for the next years, Deutsche Bank has such a potential 106 00:05:24,800 --> 00:05:30,080 Speaker 3: to grow its profitability by itself, to grow and look 107 00:05:30,120 --> 00:05:31,680 Speaker 3: from where we were coming. I took over the bank 108 00:05:31,720 --> 00:05:33,960 Speaker 3: with twenty four billion of revenues. Now we are heading 109 00:05:33,960 --> 00:05:35,800 Speaker 3: thirty billion revenues in twenty twenty four. 110 00:05:35,839 --> 00:05:36,799 Speaker 2: We reduced the cost. 111 00:05:37,320 --> 00:05:39,720 Speaker 3: Why shall I look outside If I can do the 112 00:05:39,720 --> 00:05:42,920 Speaker 3: next steps on my own, that's my whole focus. You know, 113 00:05:43,040 --> 00:05:46,360 Speaker 3: I'm not talking about the years after the next years, 114 00:05:46,600 --> 00:05:49,039 Speaker 3: but for the time being, only focused on ourselves. 115 00:05:49,080 --> 00:05:51,559 Speaker 1: In the recent earnings that you just reported right before 116 00:05:51,640 --> 00:05:55,000 Speaker 1: flying out to Washington, DC, you reported a forty two 117 00:05:55,040 --> 00:05:58,039 Speaker 1: percent gain on revenue, which is fantastic quarter over quarter. 118 00:05:58,480 --> 00:06:02,800 Speaker 1: You also increased provisions for loan losses and this was 119 00:06:02,920 --> 00:06:06,240 Speaker 1: uncommercial mortgage debt and a whole host of other assets. 120 00:06:06,440 --> 00:06:08,160 Speaker 1: A lot of people are tying this to some of 121 00:06:08,200 --> 00:06:10,680 Speaker 1: the slowdown that we've seen in the German economy. Do 122 00:06:10,680 --> 00:06:11,600 Speaker 1: you think that's accurate? 123 00:06:13,160 --> 00:06:15,440 Speaker 3: No, I think we need to be very precise when 124 00:06:15,440 --> 00:06:17,599 Speaker 3: it comes to the lonees's provision of dorshrank. First of all, 125 00:06:17,720 --> 00:06:20,520 Speaker 3: to be honest, I think we are still a bank 126 00:06:20,560 --> 00:06:23,520 Speaker 3: with a very low risk profile. Our loness provisions are 127 00:06:24,320 --> 00:06:27,800 Speaker 3: over the last years somewhere between twenty five and thirty 128 00:06:27,800 --> 00:06:30,760 Speaker 3: to thirty five basis points. If you compare that internationally 129 00:06:30,760 --> 00:06:34,080 Speaker 3: and globally, it really shows that it's a low risk profile. 130 00:06:34,800 --> 00:06:36,440 Speaker 2: Now there are two or three. 131 00:06:36,440 --> 00:06:39,800 Speaker 3: Specific reasons why we have shown in increased loanness provisions 132 00:06:39,800 --> 00:06:44,520 Speaker 3: in Q three. We still have some impacts from the 133 00:06:44,560 --> 00:06:47,880 Speaker 3: backlock situation on the post bank integration that will go away. 134 00:06:47,920 --> 00:06:49,640 Speaker 2: Actually, we will even see. 135 00:06:49,400 --> 00:06:52,800 Speaker 3: Some reversals of Lona's provisions in twenty twenty five. Then 136 00:06:52,839 --> 00:06:55,160 Speaker 3: there is a so say a little bit more complex 137 00:06:55,240 --> 00:06:58,760 Speaker 3: items that for one or two exposures. Actually we had 138 00:06:58,760 --> 00:07:00,840 Speaker 3: hatches in place, but we needed to build the gross 139 00:07:00,880 --> 00:07:04,440 Speaker 3: loanness provision, but we got the hedge income via the 140 00:07:04,440 --> 00:07:07,600 Speaker 3: revenue stream, so on a net basis very much controlled 141 00:07:07,839 --> 00:07:10,080 Speaker 3: and on commercial real estate. To be honest, we saw 142 00:07:10,080 --> 00:07:12,280 Speaker 3: in the third quarter for the first time. I'm really 143 00:07:12,280 --> 00:07:15,120 Speaker 3: happy about that, a reduction in Lona's provision. So we 144 00:07:15,200 --> 00:07:18,600 Speaker 3: think we have seen the peak. Valuations are coming back. Obviously, 145 00:07:19,000 --> 00:07:22,120 Speaker 3: reducing interest rates are helping. To be honest, I think 146 00:07:22,160 --> 00:07:24,680 Speaker 3: Deutsche Bank has seen the peak of loaner's provisions in 147 00:07:24,720 --> 00:07:27,960 Speaker 3: the third quarter from a quarterly number. I'm very very 148 00:07:28,000 --> 00:07:31,480 Speaker 3: confident in our risk management. I've done that for twenty 149 00:07:31,480 --> 00:07:33,400 Speaker 3: five years in this bank, so I think I know 150 00:07:33,480 --> 00:07:35,440 Speaker 3: the book, so I have no doubts. 151 00:07:35,560 --> 00:07:37,880 Speaker 1: I think people are not as concerned about some sort 152 00:07:37,920 --> 00:07:40,240 Speaker 1: of existential risk to Deutsche Bank or anything like that. 153 00:07:40,520 --> 00:07:42,800 Speaker 1: The concern is really where is growth going to come from? 154 00:07:43,080 --> 00:07:45,280 Speaker 1: Because right now the German economy is not showing it 155 00:07:45,640 --> 00:07:48,400 Speaker 1: and you're seeing actually a contraction and you're seeing concern 156 00:07:48,600 --> 00:07:52,040 Speaker 1: about businesses about how much production can be absorbed given 157 00:07:52,320 --> 00:07:53,600 Speaker 1: some of the lack of spending. 158 00:07:54,000 --> 00:07:54,840 Speaker 2: How do you grow? 159 00:07:54,880 --> 00:07:57,120 Speaker 1: Do you move outside of Germany? Do you increase your 160 00:07:57,120 --> 00:08:01,000 Speaker 1: exposure to places like Italy and Spain and France and 161 00:08:01,280 --> 00:08:04,560 Speaker 1: the US or is there still an opportunity? 162 00:08:05,200 --> 00:08:07,560 Speaker 3: Well, there are a lot of opportunities, and that was 163 00:08:07,600 --> 00:08:10,800 Speaker 3: always the recently, so why we decided as Toutchure Bank 164 00:08:10,800 --> 00:08:11,680 Speaker 3: to be a global bank. 165 00:08:12,080 --> 00:08:13,200 Speaker 2: I love my home country. 166 00:08:13,280 --> 00:08:15,480 Speaker 3: We have approximately thirty eight or thirty nine percent of 167 00:08:15,520 --> 00:08:19,040 Speaker 3: our revenues in Germany, but I think it is so 168 00:08:19,120 --> 00:08:22,120 Speaker 3: important in this world which we are experienced, to be 169 00:08:22,360 --> 00:08:26,680 Speaker 3: globally diversified, and the advantage of that we are seeing 170 00:08:26,760 --> 00:08:29,600 Speaker 3: right now. Our growth rates in Asia in particular playing 171 00:08:29,640 --> 00:08:33,440 Speaker 3: also the European Asian Bridge are really nice and the 172 00:08:33,440 --> 00:08:37,599 Speaker 3: momentum I see it is simply growing. We have a 173 00:08:37,679 --> 00:08:40,040 Speaker 3: nice business in the US. We're doing almost twenty percent 174 00:08:40,040 --> 00:08:42,199 Speaker 3: of our revenues in the US. We are not offering 175 00:08:42,320 --> 00:08:45,080 Speaker 3: each and everything in the US, but there where we 176 00:08:45,120 --> 00:08:48,400 Speaker 3: are offering we are actually even gaining market share, which 177 00:08:48,440 --> 00:08:52,640 Speaker 3: is good. And then look, we always said we want 178 00:08:52,640 --> 00:08:55,000 Speaker 3: to be the global house bank to our corporate and 179 00:08:55,040 --> 00:08:59,440 Speaker 3: private clients, in particular in a time of uncertainty of 180 00:08:59,520 --> 00:09:03,400 Speaker 3: GEOPLI do uncertain you cannot imagine how many clients are 181 00:09:03,400 --> 00:09:06,600 Speaker 3: coming back to us and are asking for our advice 182 00:09:06,679 --> 00:09:10,400 Speaker 3: with regard to changing their networks, making sure that they 183 00:09:10,400 --> 00:09:14,280 Speaker 3: are diversified, opening other markets and there we can help. 184 00:09:14,320 --> 00:09:17,560 Speaker 3: And therefore the situation as challenging as it is, for 185 00:09:17,679 --> 00:09:20,000 Speaker 3: a global house bank like Deutsche Bank, it's actually an 186 00:09:20,000 --> 00:09:24,520 Speaker 3: opportunity to advise their clients in this challenging situation, and 187 00:09:24,600 --> 00:09:25,520 Speaker 3: that's what we are seeing. 188 00:09:25,520 --> 00:09:27,760 Speaker 2: The momentum of the revenue side very positive. 189 00:09:27,880 --> 00:09:30,320 Speaker 1: How much more are you seeing that from clients looking 190 00:09:30,400 --> 00:09:34,640 Speaker 1: to diversify where they are or move away from certain countries. 191 00:09:35,120 --> 00:09:36,000 Speaker 2: It's a constant theme. 192 00:09:36,320 --> 00:09:41,160 Speaker 3: I would say, it's a constant theme since approximately. 193 00:09:40,520 --> 00:09:41,480 Speaker 2: Two or three years. 194 00:09:42,000 --> 00:09:46,920 Speaker 3: Of course, the COVID situation but also the awful invasion 195 00:09:46,960 --> 00:09:50,520 Speaker 3: of Russia into Ukraine have really, in my view, sharpened 196 00:09:50,640 --> 00:09:54,280 Speaker 3: the risk management muscle of our corporate clients and they 197 00:09:54,280 --> 00:09:58,280 Speaker 3: are thinking far more about diversification than ever before. And 198 00:09:58,720 --> 00:10:01,280 Speaker 3: in this regard they are looking actually for a bank 199 00:10:01,360 --> 00:10:04,520 Speaker 3: with a global exposure, with a network in over sixty 200 00:10:04,559 --> 00:10:07,920 Speaker 3: countries and Therefore, it's a constant theme which we've seen 201 00:10:07,960 --> 00:10:10,880 Speaker 3: for the last two years, and actually it is still 202 00:10:11,040 --> 00:10:11,720 Speaker 3: further growth. 203 00:10:12,000 --> 00:10:15,000 Speaker 1: What region is the best for you are the one 204 00:10:15,000 --> 00:10:16,520 Speaker 1: that you're focused on for expansion. 205 00:10:17,640 --> 00:10:20,760 Speaker 3: Well, from expansion, I would say there is a lot 206 00:10:20,800 --> 00:10:25,160 Speaker 3: of activity actually in Asia also there if you think 207 00:10:25,200 --> 00:10:28,960 Speaker 3: about the diversifacation there, I will always say it's not 208 00:10:29,040 --> 00:10:33,200 Speaker 3: about decoupling from China. It's all about diversifying. And we 209 00:10:33,280 --> 00:10:37,199 Speaker 3: can see a lot of a lot of momentum actually 210 00:10:37,720 --> 00:10:44,000 Speaker 3: and action happening in actually diversifying business opportunities from our 211 00:10:44,080 --> 00:10:48,840 Speaker 3: corporate clients within Asia, going to Sausaea, outside of China, 212 00:10:49,080 --> 00:10:51,520 Speaker 3: going to India, going to the southeast of Asia. That 213 00:10:51,600 --> 00:10:53,720 Speaker 3: is the reason why we are in more than seventeen 214 00:10:53,720 --> 00:10:57,400 Speaker 3: markets in Asia. So that is clearly a gross market. 215 00:10:57,440 --> 00:11:00,880 Speaker 3: Don't underestimate the Middle East. I think it is for 216 00:11:00,920 --> 00:11:03,959 Speaker 3: the next years. It's a gross market. We invested heavily 217 00:11:04,200 --> 00:11:06,640 Speaker 3: on the private wealth management site, but in particular also 218 00:11:06,640 --> 00:11:07,640 Speaker 3: in the investment. 219 00:11:07,320 --> 00:11:09,600 Speaker 2: Bank on the Middle East. 220 00:11:10,200 --> 00:11:13,800 Speaker 3: And then from a product point of view, we took 221 00:11:14,120 --> 00:11:18,920 Speaker 3: actually eighteen months ago, we took the clear decision to 222 00:11:19,040 --> 00:11:22,600 Speaker 3: grow our fee business in the origination advisory business because 223 00:11:22,600 --> 00:11:25,000 Speaker 3: we always thought at some point in time net interest 224 00:11:25,080 --> 00:11:27,520 Speaker 3: income will reach its peak. We need to increase our 225 00:11:27,600 --> 00:11:31,520 Speaker 3: fee business. That, combined with the advisory needs of our clients, 226 00:11:31,880 --> 00:11:35,360 Speaker 3: is a real opportunity that we want to be stronger. 227 00:11:35,640 --> 00:11:37,600 Speaker 1: Christian saving. Thank you so much for being with us. 228 00:11:37,640 --> 00:11:39,800 Speaker 1: It's Christian saving of Deutsche Bank.