Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: It looks increasingly like there's not going to be a
Speaker 2: US EU trade deal, and we've got Ollie Crook sitting
Speaker 2: down with a few CEOs.
Speaker 3: He would very much like to see some carve outs.
Speaker 2: Absolutely, Germany's been moving in that direction. Germany's be hoping
Speaker 2: that it's going to get carvats, particularly for the car sex,
Speaker 2: particularly for the industrial sector. That is looking like it
Speaker 2: is going to be harder and harder to achieve.
Speaker 4: So A, how do you prepare for that?
Speaker 2: And B how do you invest in Germany to take
Speaker 2: advantage of the current government large est that appears to
Speaker 2: be emanating from Berlin. There's two people that we should
Speaker 2: be asking, So let's hand things over to Olie Krug.
Speaker 1: Yeah, that's right guy. I mean, we know we've been
Speaker 1: talking about it for years. The German economy has been
Speaker 1: effectively flatlining for a number of years. With the new
Speaker 1: Chancellor of Friedrich Meritz, he's made it the central promise
Speaker 1: to turn that economy around. The first step was by
Speaker 1: amending the German constitution to change the so called debt break,
Speaker 1: freeing the government to unleast potentially more than they're a
Speaker 1: trillion euros in financing. Now the question is how do
Speaker 1: you spend that money, how do you attract the private money,
Speaker 1: and critically, what reforms are needed to or the structurally
Speaker 1: within Germany. So it's not just a sugar high, but
Speaker 1: a meaningful reordering of the economy. Here to help answer
Speaker 1: those questions are the leaders of two of Germany's most
Speaker 1: important institutions. We have Zemans, with its deep heritage in
Speaker 1: the German industrial base, now leading the way and bringing
Speaker 1: the industrial and the digital worlds together. And of course
Speaker 1: Deutsche Bank, the biggest lender to Europe's biggest economy, an institution,
Speaker 1: an institution whose capital flows through both the national champions
Speaker 1: and the countless empsomis that composed the middle stuns Christian
Speaker 1: Zaving Roland Bush, thank you so much for joining us
Speaker 1: on Bloomberg today, your meeting with the Chancellor a little
Speaker 1: bit later to behesse of Well, really, you guys, having
Speaker 1: founded this initiative Made in Germany, we now have pledges
Speaker 1: of upwards of six hundred billion euros worth of investment.
Speaker 1: What do you hope that Made in Germany can deliver?
Speaker 3: Well?
Speaker 5: Thanks, first of all, thank you for the invitation. Look,
Speaker 5: I think we always strifle the same gold, which is
Speaker 5: to finally have gross and competitiveness back in Germany and
Speaker 5: in Europe. And I do believe, and we do believe
Speaker 5: if gross is coming back to Germany, it's also good
Speaker 5: for Europe. And in this regard, gross cannot only be
Speaker 5: debt financed by the government, it cannot only be stimulated
Speaker 5: by the government.
Speaker 3: Actually we need the economy.
Speaker 5: And therefore a small group around Roland and myself and others,
Speaker 5: within a couple of months after in my view, a
Speaker 5: solid start of the government actually said.
Speaker 3: We also want to step up.
Speaker 5: We want to show what potential Germany has, and therefore
Speaker 5: we founded this initiative. And I think it's quite impressive
Speaker 5: for what we have collected after a couple of months
Speaker 5: was over six hundred billion of investments sixty one companies,
Speaker 5: and to be honest, I think more to come over
Speaker 5: the next month.
Speaker 3: But it shows what the sentiment is and that we
Speaker 3: have a chance.
Speaker 1: And so I'd like to get an idea sort of
Speaker 1: more concretely, because we get we're sort of in the
Speaker 1: age of large pledges to government and spending in local economies.
Speaker 1: So I like to get an idea from Zeemans, for example,
Speaker 1: how much of that money is coming from Zemans and
Speaker 1: specifically what are you targeting those investments into.
Speaker 4: Well, So, I mean this goes much beyond Semens.
Speaker 6: Now, these are more than six hundred, six hundred and
Speaker 6: thirty one billion euros which we are talking about.
Speaker 4: And it's a combination of as.
Speaker 6: You said, sixty one companies, its corporations, it's financial institutions,
Speaker 6: but it's also small and medium sized enterprises and startups.
Speaker 4: So it's a combination.
Speaker 6: They're all geared for deploying capital into a country where
Speaker 6: we believe in its innovation strength. We have small and
Speaker 6: medium sized companies hidden champions. They are unique in their
Speaker 6: technology and we believe that with the people which we have,
Speaker 6: we can drive this to the next level. Yet you
Speaker 6: need a little bit of structural changes in order to
Speaker 6: really attract the capital that we all know that.
Speaker 4: So, and they've identified nine.
Speaker 6: Action fields and they are almost completely in sunk what's
Speaker 6: written in the coalition contract. And then coming to SEMENS,
Speaker 6: I mean we're investing in manufacturing innovation in along it.
Speaker 6: For example, want to invest in what we call the
Speaker 6: industrial meto verse kind of manufacturer driving digitalization to the
Speaker 6: next level, be about to deploy that capital as we speak.
Speaker 6: The same is what happens here in Berlin. It's a
Speaker 6: completely new new precinct in Berlin. We're investing, leveraging also
Speaker 6: other financial investors' capital. It's a fully digitalized city, living,
Speaker 6: working and manufacturing at the same time. Capital will be
Speaker 6: deployed as we speak and so on.
Speaker 4: But we have more than that. We have more than
Speaker 4: fifty lighthouse projects from.
Speaker 6: All the companies where they say these are my ideas,
Speaker 6: this is what I use the capital.
Speaker 1: For, and so's to sort of zoom out and see
Speaker 1: kind of looking into the future five ten years from now,
Speaker 1: Christian when we're trying to imagine, if this initiative is
Speaker 1: successful and the initiative of the government, what the German
Speaker 1: economy looks like, how different it might be from these
Speaker 1: sort of traditional ideas that we have about the German economy,
Speaker 1: which is a lot of smokestacks, a lot of heavy industry,
Speaker 1: a very energy.
Speaker 3: Dependent.
Speaker 1: What do we look like in this what does economy
Speaker 1: look like in five to ten years?
Speaker 5: Always hard to exactly zoom out and says what it
Speaker 5: looks like in five to ten years, but you know,
Speaker 5: sometimes history tells you what is possible.
Speaker 3: If you think about.
Speaker 5: How the German economy actually changed over the last.
Speaker 3: Thirty or forty years.
Speaker 5: When I started in banking in the area in the
Speaker 5: location where I started, this was an industry or this
Speaker 5: was a location which was dominated by textile and the
Speaker 5: printing industry completely changed. And if I think about family
Speaker 5: owned companies, if I think about semens, if I think
Speaker 5: about others how they now actually apply artificial intelligence for
Speaker 5: industrial processes, I think Germany can be and must be
Speaker 5: a technology let country. If I think about sustainability technology
Speaker 5: which regard to sustainability, we haven't talked about sustainability so
Speaker 5: much over the last twelve months. Well, this is a
Speaker 5: key key topic. Germany has the leading technology to actually
Speaker 5: muss that.
Speaker 3: Challenge to export that.
Speaker 5: I do believe by the way that Germany will always
Speaker 5: be an export country. And then with leading technologies we
Speaker 5: can master that. For that, you need investments. For that,
Speaker 5: you need to up to date, and therefore it is
Speaker 5: so important that we actually invest into our capabilities.
Speaker 3: Third point could be defense.
Speaker 5: I'm actually glad that we are upsizing our defense, not
Speaker 5: only in order to defend our own continent, but moreover
Speaker 5: that most of the defense investments will actually doing very
Speaker 5: well for future technologies, so you can actually initiate a
Speaker 5: new industry with defense investments. So I think we will
Speaker 5: see a further development of the German industry. But I
Speaker 5: do believe that technology, artificially intelligence but also sustainability will
Speaker 5: be something where German industries will be leading in five
Speaker 5: to ten years.
Speaker 1: In Roland, you are sort of coming from this company
Speaker 1: that has this heritage and extreme heavy in the streets.
Speaker 1: Now transition to do exactly sort of what you're describing
Speaker 1: there to what So how do you appraise the kind
Speaker 1: of Germany's structural advantages in order to sort of sort
Speaker 1: of take advantage of what we're talking about here.
Speaker 6: So let's take the AI technology as one of those
Speaker 6: fundamental technologies which are fundamentally changing actually everything we talk
Speaker 6: about industrial AI. So what you do need is data.
Speaker 6: I mean better data beat better algorithms. So we're sitting
Speaker 6: on a massive amount of data. This is one of
Speaker 6: the most industrialized economies in the world, and against more
Speaker 6: than medium sized enterprises, large ones. They're creating data from
Speaker 6: the buildings, the manufacturing sites they're engineering. So this is
Speaker 6: the number one, we can leverage that data and pring
Speaker 6: it in what we call industrial foundation models, which are
Speaker 6: not hallucinating. They are really working on the shop floor
Speaker 6: agents which act on your bed of doing things on
Speaker 6: a shop floor, managing actually lines or even whole plants.
Speaker 6: Together with people trained on AI technology. Is that does
Speaker 6: not go without people. We need people who can use
Speaker 6: these technologies, and the combination of this innovation strengths domain
Speaker 6: know how but also.
Speaker 4: The data village of available that can help us a bit.
Speaker 6: The only point here is we need less regulation to
Speaker 6: release the power and the speed with which this technology
Speaker 6: can really hit the market. So there are a couple
Speaker 6: of things which we have to change. I'm constantly saying that,
Speaker 6: but the potential is there.
Speaker 1: Well, while we're on the subject, I'll stay with you
Speaker 1: because this is my next question. Is the roadmap to
Speaker 1: getting there? Right, we've slaid out the ambition, Now the
Speaker 1: roadmap to getting there specifically, what have you been encouraged
Speaker 1: by what you've heard from this government and what you
Speaker 1: know sort of what reforms concrearly would you like to
Speaker 1: see in the next six months.
Speaker 6: So we have nine action fields and again they are
Speaker 6: in sunc with what the government is planning to do
Speaker 6: any and just to spell out some Number one is
Speaker 6: coming back to innovations, the way how we are supporting innovation,
Speaker 6: university schools, education system.
Speaker 4: The other one is the labor market.
Speaker 6: We need the best talents in the market and we
Speaker 6: need to deploy the working forces which we have.
Speaker 4: You have to bring people who are coming to us
Speaker 4: into work.
Speaker 6: Another one is the investment climate that you have incentives
Speaker 6: for investing and deploying money and vc some first actions
Speaker 6: already taken by the government. We talk about less regulations,
Speaker 6: faster decision processes. It doesn't help I A if it
Speaker 6: takes five years to get an approval for our plan,
Speaker 6: then you want to deploy capital in the.
Speaker 4: Next three years. And the other one is digitalization.
Speaker 6: We have to digitalize the companies but also government processes
Speaker 6: because you can be much much faster and much more productive.
Speaker 4: I'm doing so just to.
Speaker 6: Line out some of those areas.
Speaker 4: It's not you know what to do, it's about doing
Speaker 4: do it.
Speaker 1: So Christian, we've heard about cutting red tape in Germany
Speaker 1: for how many decades now, right, this is something that
Speaker 1: we keep hearing about from the government. What do you
Speaker 1: think again, like concretely where would you like to see
Speaker 1: from this government. You speak to every basically business within Germany.
Speaker 1: What are the sort of three things that you know
Speaker 1: you could really concretely put into place in the next
Speaker 1: six months which would encourage these companies and give them
Speaker 1: the confidence to invest well.
Speaker 5: The three main complaints of the people and in particular
Speaker 5: family owned companies but also larger companies clearly a regulation
Speaker 5: and bureaucracy and their speed. And this is an issue
Speaker 5: where it's not only Germany. We also have to have
Speaker 5: a far bigger influence of what is happening in Europe.
Speaker 5: And therefore I also think more leadership, a stronger government
Speaker 5: in Germany will also help to do structural changes in
Speaker 5: Europe which we need. Number Two energy prices. It's still
Speaker 5: an issue now. I think the government is going into
Speaker 5: the right direction, but this is something which we clearly
Speaker 5: need to have in mind. Number three is a labor
Speaker 5: market and flexibility around the market. This is kind of
Speaker 5: the feedback we get from our clients now.
Speaker 3: I think there is a.
Speaker 5: Force one now, as I said, the government had a
Speaker 5: good start. We need to focus on our pension plans
Speaker 5: because I do believe it's not only important that we
Speaker 5: have a secured system for our people, for the retirement
Speaker 5: people also in ten fifteen years time. I think it's
Speaker 5: actually the key to success for investments. If we have
Speaker 5: a capital based pension plan that also means that more
Speaker 5: investments will go into our economy. It's nothing else than
Speaker 5: the real start of a domestic capital market.
Speaker 3: That's what we need.
Speaker 5: If we can focus on that, I think even more
Speaker 5: foreign investments will run into Germany.
Speaker 1: So you've touched a number of points. I want to
Speaker 1: pick up on a couple of them. But a little
Speaker 1: bit earlier, you said you think that Germany will remain
Speaker 1: an export economy at a time when we're seeing that
Speaker 1: sort of concept really being challenged at the global.
Speaker 3: Scale by the United States.
Speaker 1: I'd like to get an idea from you personally, but
Speaker 1: also the clients you speak to. How are they weighing
Speaker 1: the optimism that comes with what we're heard from the
Speaker 1: German government with the risks that we're hearing from.
Speaker 3: The United States.
Speaker 1: And you know what is winning in terms of making decisions.
Speaker 5: For businesses, Well, I think it's all about diversification. I
Speaker 5: think we learned through COVID already the first steps of
Speaker 5: what it means to be diversified, not only to diversify
Speaker 5: your production and supply chains, but also you sort of
Speaker 5: say sales market. So I think a lot of companies
Speaker 5: are actually looking into diversification, more agreements, more bilateral relationships.
Speaker 3: But I hear nobody.
Speaker 5: Actually talk about let's only focus on the German market,
Speaker 5: because we know that's too small. Second point is actually
Speaker 5: that we all need to focus more on Europe.
Speaker 3: We need a stronger European home market.
Speaker 5: The stronger this market is was four hundred and fifty
Speaker 5: million consumers, the better it is also for our negotiations
Speaker 5: versus the US, versus other countries. And therefore, I do
Speaker 5: believe the stronger you make yourself, and again this initiative
Speaker 5: is prone to that, the better your starting position is.
Speaker 5: I do believe that most of the companies are not
Speaker 5: trending away from globalization. They are simply saying, how can
Speaker 5: we diversify and making sure that we are not too
Speaker 5: dependent from one or the other country.
Speaker 1: And roland, you know, I mean, the worst of the
Speaker 1: world may not be, but the United States certainly is.
Speaker 1: We're going to get teriffs from at least ten to
Speaker 1: thirty percent in the next two weeks. How are you
Speaker 1: sort of appraising that risk and how it could sort
Speaker 1: of affect the plans here within Germany.
Speaker 6: So what is the eventual outcome. Let's put it that way.
Speaker 6: We will end up in higher tariffs. These are the
Speaker 6: United States is what we don't really want. Actually, we
Speaker 6: wanted to have lower ones because we believe in free trade.
Speaker 6: This stimulates economies and growth, so that would drive inflation
Speaker 6: to some point. However, there's one point which is super
Speaker 6: relevant is we have to stop this uncertainty. So once
Speaker 6: there's a deal, the deal should be the deal, and
Speaker 6: then we can deploy capital again based on facts, how
Speaker 6: the terrorists look like and hopefully that they are not
Speaker 6: going too high in two extremes that were tom economies.
Speaker 4: And secondly, is it's super important.
Speaker 6: If we finally manage to make free trade agreements in
Speaker 6: a couple of years, in not decades.
Speaker 4: That's super element because what would you do if.
Speaker 6: You have two large, large, large economies viure depending on
Speaker 6: diversifying other ones. Azion is a super important region, growing region,
Speaker 6: Middle East. We have South America, so there's so many
Speaker 6: regions where we can create other markets on top. And
Speaker 6: I'm not saying that the United States is not a
Speaker 6: relevant market for US, and there's still the most relevant market,
Speaker 6: but still there are opportunities, and then we're ending up
Speaker 6: in a much much more resilient and better So.
Speaker 1: Yeah, and so talking about some of the investments that
Speaker 1: you Roland have made in the United States over the
Speaker 1: last year or two, basically fifteen billion dollars worth of
Speaker 1: deals in kind of AI based and digital services within
Speaker 1: the United States, I'd like to get an idea. Did
Speaker 1: you not see those kinds of opportunities within Europe? Is
Speaker 1: that something that you could see happening in Europe or
Speaker 1: the companies just not there.
Speaker 6: The investment you're talking about two investments, A ten billion
Speaker 6: investment in altear simulation software five billion also in software
Speaker 6: for similating molecules.
Speaker 4: It's about the pharmaceutical and biochemical market.
Speaker 6: And I have to say that if you look for
Speaker 6: software assets, indeed you will end up in the United
Speaker 6: States mainly. There are alternatives. You're also invested in European
Speaker 6: companies smaller though, but you're not hessitating to invest capital
Speaker 6: R and D, but also M and A in Europe.
Speaker 6: We're looking into companies there as well, hardware companies which
Speaker 6: BRIS do may know.
Speaker 4: How hardware which creates data.
Speaker 6: So but in that case, if you really look for software,
Speaker 6: and Simon's invested really quite a bit twenty five billion
Speaker 6: over the last thouty and fifteen years in software. Most
Speaker 6: of that comes from.
Speaker 4: The United States.
Speaker 1: And we've been talking Christian a lot about European champions
Speaker 1: and changing the way that we think about preserving companies
Speaker 1: at the national level versus the European level. And I
Speaker 1: want to understand sort of you when you look at
Speaker 1: Deutsche Bank, which is now at the end of what
Speaker 1: was a very long turnaround process but now it's feeling
Speaker 1: like it's in a strong and confident position.
Speaker 4: Is the same moment for Deutsche.
Speaker 1: Bank to get into a much more sort of aggressive
Speaker 1: mode in terms of expansion mode potentially looking at M.
Speaker 3: And A across borders.
Speaker 1: What do you want Deutsche Bank's world to be in
Speaker 1: the kind of world of European Champions.
Speaker 5: Well, I do think what we see in this world
Speaker 5: is was all the geopolitical uncertainties with all the also
Speaker 5: economic uncertainties, there is one trend which is the same
Speaker 5: across the world that our clients want to have a
Speaker 5: European alternative to the US banks. We have very strong
Speaker 5: US banks, very capable of US banks, but in this
Speaker 5: world of geopolitical uncertainties, they want to have a capable
Speaker 5: global European player, and there are not so many European
Speaker 5: banks left with a full investment bank, with a full
Speaker 5: corporate bank, with a global network in over sixty countries.
Speaker 3: That's the role we can play now.
Speaker 5: This role we not only want to play because we
Speaker 5: feel ourselves at lobal bank, but it's obviously much easier
Speaker 5: to do that if you are coming from a country
Speaker 5: which is economically increasing, which is economically on the right
Speaker 5: pass and which is.
Speaker 3: Also pulling now Europe.
Speaker 5: And therefore I think we have a unique chance, not
Speaker 5: only as Germany and Europe, but also as Deutsche Bank
Speaker 5: to actually be the one who is facilitating and who
Speaker 5: is contributing to our clients growth around the world. The
Speaker 5: diversification also in banking, not only to rely on one bank,
Speaker 5: but on many banks, and that from a regional perspective
Speaker 5: has never been bigger than around.
Speaker 1: And you touch about diversifying, and just another question to you,
Speaker 1: is this by europe trend? Is this a lasting thing?
Speaker 1: Is this something that you're seeing from investors that you
Speaker 1: talk to that they're wanting to make a meaningful commitment
Speaker 1: to Europe, and what does that actually look like in
Speaker 1: terms of numbers from where you're setting.
Speaker 5: Well, for the first time, we see obviously since the
Speaker 5: last three or four months, a quite significant reallocation from
Speaker 5: funds in particular into Europe.
Speaker 3: The interest is huge.
Speaker 5: Whenever we talk with investors, they really want to understand
Speaker 5: what's going on in Germany, what's going on in Europe.
Speaker 5: By the way, already in doubles this year, six months ago,
Speaker 5: most of the investors said micro Germany is really good,
Speaker 5: and with that they mean the German corporates, the German companies, Macro.
Speaker 5: You need to do in improvements and that's exactly what
Speaker 5: we want to try now. Of course, the government stepped
Speaker 5: up with the fiscal program, but also with the reforms.
Speaker 5: If we now actually do something sort of say together,
Speaker 5: if we march in parallel, we have.
Speaker 3: A huge chance.
Speaker 5: And then I do believe with further reforms to come,
Speaker 5: and that is necessary. I do believe that this trend
Speaker 5: of reallocating funds to Europe will not stop if we
Speaker 5: are not doing further reforms and just rely on fiscal debt.
Speaker 3: That doesn't help We need the fiscal.
Speaker 1: Reforms and Roland a sort of final question to you
Speaker 1: to sort of close things up. You know, Europe does
Speaker 1: not want to become the United States in a lot
Speaker 1: of different ways, but we do want here sort of
Speaker 1: capital markets like the United States. We do want the
Speaker 1: kind of innovation we have in the United States. From
Speaker 1: what we've seen from the Trump administration and really the
Speaker 1: US for the last couple of decades, what do you
Speaker 1: think Europe can learn it can take from that without
Speaker 1: sort of sacrificing the parts that are very important here.
Speaker 6: And that's a very good point. We have to hold
Speaker 6: in our values. They brought us where we are and
Speaker 6: they are good, and be keep to these values. We
Speaker 6: really have to make structural reforms in Germany but.
Speaker 4: Also on European level.
Speaker 6: That requires courage, It requires solution orientation, but also really
Speaker 6: bold moves. You cannot just take one of the problems
Speaker 6: which we have in these acts. You cannot take an
Speaker 6: act which is substantially misconstructed and find you in a
Speaker 6: little bit. So we have to go back and really
Speaker 6: think about what is it. How can we accelerate the development,
Speaker 6: economic development, but also innovation development, And again it's making
Speaker 6: bold decisions and make them fast.
Speaker 1: Well, gentlemen, thank you so much for your time today.
Speaker 1: Christian Zaving Roland Bush. And this commitment that we've got
Speaker 1: for made in Germany, more than six hundred billion euros
Speaker 1: being pledged from a dozen of different companies across Germany.
Speaker 1: And we'll be having a meeting there with these gentlemen
Speaker 1: and the German Chancellor a little later this afternoon.
Speaker 4: This is Bloomberg