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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: It looks increasingly like there's not going to be a

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Speaker 2: US EU trade deal, and we've got Ollie Crook sitting

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Speaker 2: down with a few CEOs.

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Speaker 3: He would very much like to see some carve outs.

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Speaker 2: Absolutely, Germany's been moving in that direction. Germany's be hoping

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Speaker 2: that it's going to get carvats, particularly for the car sex,

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Speaker 2: particularly for the industrial sector. That is looking like it

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Speaker 2: is going to be harder and harder to achieve.

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Speaker 4: So A, how do you prepare for that?

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Speaker 2: And B how do you invest in Germany to take

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Speaker 2: advantage of the current government large est that appears to

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Speaker 2: be emanating from Berlin. There's two people that we should

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Speaker 2: be asking, So let's hand things over to Olie Krug.

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Speaker 1: Yeah, that's right guy. I mean, we know we've been

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Speaker 1: talking about it for years. The German economy has been

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Speaker 1: effectively flatlining for a number of years. With the new

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Speaker 1: Chancellor of Friedrich Meritz, he's made it the central promise

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Speaker 1: to turn that economy around. The first step was by

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Speaker 1: amending the German constitution to change the so called debt break,

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Speaker 1: freeing the government to unleast potentially more than they're a

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Speaker 1: trillion euros in financing. Now the question is how do

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Speaker 1: you spend that money, how do you attract the private money,

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Speaker 1: and critically, what reforms are needed to or the structurally

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Speaker 1: within Germany. So it's not just a sugar high, but

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Speaker 1: a meaningful reordering of the economy. Here to help answer

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Speaker 1: those questions are the leaders of two of Germany's most

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Speaker 1: important institutions. We have Zemans, with its deep heritage in

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Speaker 1: the German industrial base, now leading the way and bringing

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Speaker 1: the industrial and the digital worlds together. And of course

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Speaker 1: Deutsche Bank, the biggest lender to Europe's biggest economy, an institution,

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Speaker 1: an institution whose capital flows through both the national champions

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Speaker 1: and the countless empsomis that composed the middle stuns Christian

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Speaker 1: Zaving Roland Bush, thank you so much for joining us

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Speaker 1: on Bloomberg today, your meeting with the Chancellor a little

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Speaker 1: bit later to behesse of Well, really, you guys, having

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Speaker 1: founded this initiative Made in Germany, we now have pledges

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Speaker 1: of upwards of six hundred billion euros worth of investment.

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Speaker 1: What do you hope that Made in Germany can deliver?

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Speaker 3: Well?

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Speaker 5: Thanks, first of all, thank you for the invitation. Look,

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Speaker 5: I think we always strifle the same gold, which is

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Speaker 5: to finally have gross and competitiveness back in Germany and

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Speaker 5: in Europe. And I do believe, and we do believe

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Speaker 5: if gross is coming back to Germany, it's also good

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Speaker 5: for Europe. And in this regard, gross cannot only be

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Speaker 5: debt financed by the government, it cannot only be stimulated

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Speaker 5: by the government.

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Speaker 3: Actually we need the economy.

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Speaker 5: And therefore a small group around Roland and myself and others,

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Speaker 5: within a couple of months after in my view, a

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Speaker 5: solid start of the government actually said.

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Speaker 3: We also want to step up.

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Speaker 5: We want to show what potential Germany has, and therefore

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Speaker 5: we founded this initiative. And I think it's quite impressive

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Speaker 5: for what we have collected after a couple of months

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Speaker 5: was over six hundred billion of investments sixty one companies,

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Speaker 5: and to be honest, I think more to come over

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Speaker 5: the next month.

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Speaker 3: But it shows what the sentiment is and that we

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Speaker 3: have a chance.

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Speaker 1: And so I'd like to get an idea sort of

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Speaker 1: more concretely, because we get we're sort of in the

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Speaker 1: age of large pledges to government and spending in local economies.

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Speaker 1: So I like to get an idea from Zeemans, for example,

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Speaker 1: how much of that money is coming from Zemans and

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Speaker 1: specifically what are you targeting those investments into.

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Speaker 4: Well, So, I mean this goes much beyond Semens.

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Speaker 6: Now, these are more than six hundred, six hundred and

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Speaker 6: thirty one billion euros which we are talking about.

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Speaker 4: And it's a combination of as.

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Speaker 6: You said, sixty one companies, its corporations, it's financial institutions,

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Speaker 6: but it's also small and medium sized enterprises and startups.

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Speaker 4: So it's a combination.

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Speaker 6: They're all geared for deploying capital into a country where

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Speaker 6: we believe in its innovation strength. We have small and

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Speaker 6: medium sized companies hidden champions. They are unique in their

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Speaker 6: technology and we believe that with the people which we have,

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Speaker 6: we can drive this to the next level. Yet you

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Speaker 6: need a little bit of structural changes in order to

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Speaker 6: really attract the capital that we all know that.

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Speaker 4: So, and they've identified nine.

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Speaker 6: Action fields and they are almost completely in sunk what's

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Speaker 6: written in the coalition contract. And then coming to SEMENS,

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Speaker 6: I mean we're investing in manufacturing innovation in along it.

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Speaker 6: For example, want to invest in what we call the

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Speaker 6: industrial meto verse kind of manufacturer driving digitalization to the

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Speaker 6: next level, be about to deploy that capital as we speak.

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Speaker 6: The same is what happens here in Berlin. It's a

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Speaker 6: completely new new precinct in Berlin. We're investing, leveraging also

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Speaker 6: other financial investors' capital. It's a fully digitalized city, living,

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Speaker 6: working and manufacturing at the same time. Capital will be

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Speaker 6: deployed as we speak and so on.

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Speaker 4: But we have more than that. We have more than

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Speaker 4: fifty lighthouse projects from.

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Speaker 6: All the companies where they say these are my ideas,

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Speaker 6: this is what I use the capital.

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Speaker 1: For, and so's to sort of zoom out and see

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Speaker 1: kind of looking into the future five ten years from now,

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Speaker 1: Christian when we're trying to imagine, if this initiative is

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Speaker 1: successful and the initiative of the government, what the German

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Speaker 1: economy looks like, how different it might be from these

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Speaker 1: sort of traditional ideas that we have about the German economy,

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Speaker 1: which is a lot of smokestacks, a lot of heavy industry,

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Speaker 1: a very energy.

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Speaker 3: Dependent.

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Speaker 1: What do we look like in this what does economy

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Speaker 1: look like in five to ten years?

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Speaker 5: Always hard to exactly zoom out and says what it

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Speaker 5: looks like in five to ten years, but you know,

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Speaker 5: sometimes history tells you what is possible.

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Speaker 3: If you think about.

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Speaker 5: How the German economy actually changed over the last.

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Speaker 3: Thirty or forty years.

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Speaker 5: When I started in banking in the area in the

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Speaker 5: location where I started, this was an industry or this

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Speaker 5: was a location which was dominated by textile and the

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Speaker 5: printing industry completely changed. And if I think about family

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Speaker 5: owned companies, if I think about semens, if I think

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Speaker 5: about others how they now actually apply artificial intelligence for

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Speaker 5: industrial processes, I think Germany can be and must be

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Speaker 5: a technology let country. If I think about sustainability technology

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Speaker 5: which regard to sustainability, we haven't talked about sustainability so

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Speaker 5: much over the last twelve months. Well, this is a

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Speaker 5: key key topic. Germany has the leading technology to actually

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Speaker 5: muss that.

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Speaker 3: Challenge to export that.

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Speaker 5: I do believe by the way that Germany will always

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Speaker 5: be an export country. And then with leading technologies we

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Speaker 5: can master that. For that, you need investments. For that,

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Speaker 5: you need to up to date, and therefore it is

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Speaker 5: so important that we actually invest into our capabilities.

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Speaker 3: Third point could be defense.

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Speaker 5: I'm actually glad that we are upsizing our defense, not

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Speaker 5: only in order to defend our own continent, but moreover

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Speaker 5: that most of the defense investments will actually doing very

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Speaker 5: well for future technologies, so you can actually initiate a

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Speaker 5: new industry with defense investments. So I think we will

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Speaker 5: see a further development of the German industry. But I

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Speaker 5: do believe that technology, artificially intelligence but also sustainability will

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Speaker 5: be something where German industries will be leading in five

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Speaker 5: to ten years.

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Speaker 1: In Roland, you are sort of coming from this company

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Speaker 1: that has this heritage and extreme heavy in the streets.

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Speaker 1: Now transition to do exactly sort of what you're describing

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Speaker 1: there to what So how do you appraise the kind

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Speaker 1: of Germany's structural advantages in order to sort of sort

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Speaker 1: of take advantage of what we're talking about here.

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Speaker 6: So let's take the AI technology as one of those

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Speaker 6: fundamental technologies which are fundamentally changing actually everything we talk

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Speaker 6: about industrial AI. So what you do need is data.

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Speaker 6: I mean better data beat better algorithms. So we're sitting

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Speaker 6: on a massive amount of data. This is one of

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Speaker 6: the most industrialized economies in the world, and against more

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Speaker 6: than medium sized enterprises, large ones. They're creating data from

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Speaker 6: the buildings, the manufacturing sites they're engineering. So this is

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Speaker 6: the number one, we can leverage that data and pring

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Speaker 6: it in what we call industrial foundation models, which are

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Speaker 6: not hallucinating. They are really working on the shop floor

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Speaker 6: agents which act on your bed of doing things on

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Speaker 6: a shop floor, managing actually lines or even whole plants.

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Speaker 6: Together with people trained on AI technology. Is that does

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Speaker 6: not go without people. We need people who can use

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Speaker 6: these technologies, and the combination of this innovation strengths domain

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Speaker 6: know how but also.

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Speaker 4: The data village of available that can help us a bit.

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Speaker 6: The only point here is we need less regulation to

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Speaker 6: release the power and the speed with which this technology

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Speaker 6: can really hit the market. So there are a couple

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Speaker 6: of things which we have to change. I'm constantly saying that,

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Speaker 6: but the potential is there.

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Speaker 1: Well, while we're on the subject, I'll stay with you

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Speaker 1: because this is my next question. Is the roadmap to

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Speaker 1: getting there? Right, we've slaid out the ambition, Now the

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Speaker 1: roadmap to getting there specifically, what have you been encouraged

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Speaker 1: by what you've heard from this government and what you

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Speaker 1: know sort of what reforms concrearly would you like to

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Speaker 1: see in the next six months.

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Speaker 6: So we have nine action fields and again they are

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Speaker 6: in sunc with what the government is planning to do

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Speaker 6: any and just to spell out some Number one is

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Speaker 6: coming back to innovations, the way how we are supporting innovation,

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Speaker 6: university schools, education system.

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Speaker 4: The other one is the labor market.

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Speaker 6: We need the best talents in the market and we

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Speaker 6: need to deploy the working forces which we have.

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Speaker 4: You have to bring people who are coming to us

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Speaker 4: into work.

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Speaker 6: Another one is the investment climate that you have incentives

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Speaker 6: for investing and deploying money and vc some first actions

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Speaker 6: already taken by the government. We talk about less regulations,

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Speaker 6: faster decision processes. It doesn't help I A if it

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Speaker 6: takes five years to get an approval for our plan,

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Speaker 6: then you want to deploy capital in the.

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Speaker 4: Next three years. And the other one is digitalization.

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Speaker 6: We have to digitalize the companies but also government processes

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Speaker 6: because you can be much much faster and much more productive.

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Speaker 4: I'm doing so just to.

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Speaker 6: Line out some of those areas.

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Speaker 4: It's not you know what to do, it's about doing

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Speaker 4: do it.

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Speaker 1: So Christian, we've heard about cutting red tape in Germany

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Speaker 1: for how many decades now, right, this is something that

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Speaker 1: we keep hearing about from the government. What do you

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Speaker 1: think again, like concretely where would you like to see

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Speaker 1: from this government. You speak to every basically business within Germany.

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Speaker 1: What are the sort of three things that you know

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Speaker 1: you could really concretely put into place in the next

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Speaker 1: six months which would encourage these companies and give them

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Speaker 1: the confidence to invest well.

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Speaker 5: The three main complaints of the people and in particular

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Speaker 5: family owned companies but also larger companies clearly a regulation

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Speaker 5: and bureaucracy and their speed. And this is an issue

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Speaker 5: where it's not only Germany. We also have to have

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Speaker 5: a far bigger influence of what is happening in Europe.

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Speaker 5: And therefore I also think more leadership, a stronger government

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Speaker 5: in Germany will also help to do structural changes in

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Speaker 5: Europe which we need. Number Two energy prices. It's still

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Speaker 5: an issue now. I think the government is going into

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Speaker 5: the right direction, but this is something which we clearly

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Speaker 5: need to have in mind. Number three is a labor

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Speaker 5: market and flexibility around the market. This is kind of

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Speaker 5: the feedback we get from our clients now.

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Speaker 3: I think there is a.

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Speaker 5: Force one now, as I said, the government had a

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Speaker 5: good start. We need to focus on our pension plans

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Speaker 5: because I do believe it's not only important that we

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Speaker 5: have a secured system for our people, for the retirement

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Speaker 5: people also in ten fifteen years time. I think it's

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Speaker 5: actually the key to success for investments. If we have

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Speaker 5: a capital based pension plan that also means that more

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Speaker 5: investments will go into our economy. It's nothing else than

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Speaker 5: the real start of a domestic capital market.

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Speaker 3: That's what we need.

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Speaker 5: If we can focus on that, I think even more

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Speaker 5: foreign investments will run into Germany.

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Speaker 1: So you've touched a number of points. I want to

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Speaker 1: pick up on a couple of them. But a little

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Speaker 1: bit earlier, you said you think that Germany will remain

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Speaker 1: an export economy at a time when we're seeing that

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Speaker 1: sort of concept really being challenged at the global.

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Speaker 3: Scale by the United States.

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Speaker 1: I'd like to get an idea from you personally, but

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Speaker 1: also the clients you speak to. How are they weighing

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Speaker 1: the optimism that comes with what we're heard from the

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Speaker 1: German government with the risks that we're hearing from.

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Speaker 3: The United States.

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Speaker 1: And you know what is winning in terms of making decisions.

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Speaker 5: For businesses, Well, I think it's all about diversification. I

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Speaker 5: think we learned through COVID already the first steps of

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Speaker 5: what it means to be diversified, not only to diversify

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Speaker 5: your production and supply chains, but also you sort of

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Speaker 5: say sales market. So I think a lot of companies

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Speaker 5: are actually looking into diversification, more agreements, more bilateral relationships.

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Speaker 3: But I hear nobody.

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Speaker 5: Actually talk about let's only focus on the German market,

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Speaker 5: because we know that's too small. Second point is actually

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Speaker 5: that we all need to focus more on Europe.

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Speaker 3: We need a stronger European home market.

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Speaker 5: The stronger this market is was four hundred and fifty

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Speaker 5: million consumers, the better it is also for our negotiations

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Speaker 5: versus the US, versus other countries. And therefore, I do

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Speaker 5: believe the stronger you make yourself, and again this initiative

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Speaker 5: is prone to that, the better your starting position is.

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Speaker 5: I do believe that most of the companies are not

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Speaker 5: trending away from globalization. They are simply saying, how can

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Speaker 5: we diversify and making sure that we are not too

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Speaker 5: dependent from one or the other country.

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Speaker 1: And roland, you know, I mean, the worst of the

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Speaker 1: world may not be, but the United States certainly is.

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Speaker 1: We're going to get teriffs from at least ten to

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Speaker 1: thirty percent in the next two weeks. How are you

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Speaker 1: sort of appraising that risk and how it could sort

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Speaker 1: of affect the plans here within Germany.

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Speaker 6: So what is the eventual outcome. Let's put it that way.

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Speaker 6: We will end up in higher tariffs. These are the

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Speaker 6: United States is what we don't really want. Actually, we

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Speaker 6: wanted to have lower ones because we believe in free trade.

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Speaker 6: This stimulates economies and growth, so that would drive inflation

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Speaker 6: to some point. However, there's one point which is super

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Speaker 6: relevant is we have to stop this uncertainty. So once

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Speaker 6: there's a deal, the deal should be the deal, and

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Speaker 6: then we can deploy capital again based on facts, how

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Speaker 6: the terrorists look like and hopefully that they are not

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Speaker 6: going too high in two extremes that were tom economies.

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Speaker 4: And secondly, is it's super important.

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Speaker 6: If we finally manage to make free trade agreements in

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Speaker 6: a couple of years, in not decades.

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Speaker 4: That's super element because what would you do if.

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Speaker 6: You have two large, large, large economies viure depending on

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Speaker 6: diversifying other ones. Azion is a super important region, growing region,

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Speaker 6: Middle East. We have South America, so there's so many

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Speaker 6: regions where we can create other markets on top. And

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Speaker 6: I'm not saying that the United States is not a

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Speaker 6: relevant market for US, and there's still the most relevant market,

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Speaker 6: but still there are opportunities, and then we're ending up

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Speaker 6: in a much much more resilient and better So.

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Speaker 1: Yeah, and so talking about some of the investments that

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Speaker 1: you Roland have made in the United States over the

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Speaker 1: last year or two, basically fifteen billion dollars worth of

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Speaker 1: deals in kind of AI based and digital services within

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Speaker 1: the United States, I'd like to get an idea. Did

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Speaker 1: you not see those kinds of opportunities within Europe? Is

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Speaker 1: that something that you could see happening in Europe or

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Speaker 1: the companies just not there.

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Speaker 6: The investment you're talking about two investments, A ten billion

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Speaker 6: investment in altear simulation software five billion also in software

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Speaker 6: for similating molecules.

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Speaker 4: It's about the pharmaceutical and biochemical market.

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Speaker 6: And I have to say that if you look for

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Speaker 6: software assets, indeed you will end up in the United

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Speaker 6: States mainly. There are alternatives. You're also invested in European

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Speaker 6: companies smaller though, but you're not hessitating to invest capital

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Speaker 6: R and D, but also M and A in Europe.

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Speaker 6: We're looking into companies there as well, hardware companies which

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Speaker 6: BRIS do may know.

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Speaker 4: How hardware which creates data.

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Speaker 6: So but in that case, if you really look for software,

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Speaker 6: and Simon's invested really quite a bit twenty five billion

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Speaker 6: over the last thouty and fifteen years in software. Most

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Speaker 6: of that comes from.

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Speaker 4: The United States.

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Speaker 1: And we've been talking Christian a lot about European champions

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Speaker 1: and changing the way that we think about preserving companies

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Speaker 1: at the national level versus the European level. And I

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Speaker 1: want to understand sort of you when you look at

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Speaker 1: Deutsche Bank, which is now at the end of what

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Speaker 1: was a very long turnaround process but now it's feeling

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Speaker 1: like it's in a strong and confident position.

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Speaker 4: Is the same moment for Deutsche.

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Speaker 1: Bank to get into a much more sort of aggressive

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Speaker 1: mode in terms of expansion mode potentially looking at M.

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Speaker 3: And A across borders.

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Speaker 1: What do you want Deutsche Bank's world to be in

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Speaker 1: the kind of world of European Champions.

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Speaker 5: Well, I do think what we see in this world

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Speaker 5: is was all the geopolitical uncertainties with all the also

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Speaker 5: economic uncertainties, there is one trend which is the same

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Speaker 5: across the world that our clients want to have a

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Speaker 5: European alternative to the US banks. We have very strong

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Speaker 5: US banks, very capable of US banks, but in this

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Speaker 5: world of geopolitical uncertainties, they want to have a capable

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Speaker 5: global European player, and there are not so many European

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Speaker 5: banks left with a full investment bank, with a full

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Speaker 5: corporate bank, with a global network in over sixty countries.

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Speaker 3: That's the role we can play now.

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Speaker 5: This role we not only want to play because we

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Speaker 5: feel ourselves at lobal bank, but it's obviously much easier

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Speaker 5: to do that if you are coming from a country

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Speaker 5: which is economically increasing, which is economically on the right

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Speaker 5: pass and which is.

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Speaker 3: Also pulling now Europe.

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Speaker 5: And therefore I think we have a unique chance, not

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Speaker 5: only as Germany and Europe, but also as Deutsche Bank

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Speaker 5: to actually be the one who is facilitating and who

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Speaker 5: is contributing to our clients growth around the world. The

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Speaker 5: diversification also in banking, not only to rely on one bank,

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Speaker 5: but on many banks, and that from a regional perspective

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Speaker 5: has never been bigger than around.

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Speaker 1: And you touch about diversifying, and just another question to you,

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Speaker 1: is this by europe trend? Is this a lasting thing?

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Speaker 1: Is this something that you're seeing from investors that you

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Speaker 1: talk to that they're wanting to make a meaningful commitment

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Speaker 1: to Europe, and what does that actually look like in

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Speaker 1: terms of numbers from where you're setting.

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Speaker 5: Well, for the first time, we see obviously since the

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Speaker 5: last three or four months, a quite significant reallocation from

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Speaker 5: funds in particular into Europe.

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Speaker 3: The interest is huge.

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Speaker 5: Whenever we talk with investors, they really want to understand

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Speaker 5: what's going on in Germany, what's going on in Europe.

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Speaker 5: By the way, already in doubles this year, six months ago,

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Speaker 5: most of the investors said micro Germany is really good,

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Speaker 5: and with that they mean the German corporates, the German companies, Macro.

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Speaker 5: You need to do in improvements and that's exactly what

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Speaker 5: we want to try now. Of course, the government stepped

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Speaker 5: up with the fiscal program, but also with the reforms.

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Speaker 5: If we now actually do something sort of say together,

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Speaker 5: if we march in parallel, we have.

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Speaker 3: A huge chance.

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Speaker 5: And then I do believe with further reforms to come,

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Speaker 5: and that is necessary. I do believe that this trend

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Speaker 5: of reallocating funds to Europe will not stop if we

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Speaker 5: are not doing further reforms and just rely on fiscal debt.

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Speaker 3: That doesn't help We need the fiscal.

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Speaker 1: Reforms and Roland a sort of final question to you

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Speaker 1: to sort of close things up. You know, Europe does

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Speaker 1: not want to become the United States in a lot

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Speaker 1: of different ways, but we do want here sort of

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Speaker 1: capital markets like the United States. We do want the

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Speaker 1: kind of innovation we have in the United States. From

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Speaker 1: what we've seen from the Trump administration and really the

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Speaker 1: US for the last couple of decades, what do you

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Speaker 1: think Europe can learn it can take from that without

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Speaker 1: sort of sacrificing the parts that are very important here.

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Speaker 6: And that's a very good point. We have to hold

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Speaker 6: in our values. They brought us where we are and

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Speaker 6: they are good, and be keep to these values. We

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Speaker 6: really have to make structural reforms in Germany but.

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Speaker 4: Also on European level.

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Speaker 6: That requires courage, It requires solution orientation, but also really

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Speaker 6: bold moves. You cannot just take one of the problems

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Speaker 6: which we have in these acts. You cannot take an

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Speaker 6: act which is substantially misconstructed and find you in a

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Speaker 6: little bit. So we have to go back and really

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Speaker 6: think about what is it. How can we accelerate the development,

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Speaker 6: economic development, but also innovation development, And again it's making

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Speaker 6: bold decisions and make them fast.

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Speaker 1: Well, gentlemen, thank you so much for your time today.

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Speaker 1: Christian Zaving Roland Bush. And this commitment that we've got

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Speaker 1: for made in Germany, more than six hundred billion euros

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Speaker 1: being pledged from a dozen of different companies across Germany.

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Speaker 1: And we'll be having a meeting there with these gentlemen

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Speaker 1: and the German Chancellor a little later this afternoon.

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Speaker 4: This is Bloomberg