Question

Presentation Topic for Finance: Deutsche Bank as an Underwriter in the equity market

Answer 1

Deutsche Bank has been a strong player in the underwriting business in the equity market. The bank provides underwriting services through its Investment Banking division. Investment banking division of Deutsche Bank is a large division and underwriting forms a part of the bank’s Advisory and Underwriting operations. Deutsche Bank earns commission from equity underwriting services.

Historically the Germany based Deutsche Bank has been a leader as an underwriter but in past it has done some business restructuring and hence its market share in the underwriting business has been declining steadily. This combined with the aggressive competition from large U.S. based investment banks has considerably reduced Deutsche Bank’s presence in the equity underwriting segment.

The period of 1980s and 1990s saw the emergence of Deutsche Bank as a global powerhouse in the Advisory and Underwriting business. The bank grew both organically and inorganically. It acquired other investment banks to bolster its underwriting business. In 1988 it acquired Toronto-based investment bank McLean McCarthy Ltd., in 1989 it acquired remainder of Morgan Grenfell.

Recently Deutsche Bank announced a restricting of its business operations and business segments in 2019. Under the restructuring plan the bank will exit its Equities Sales & Trading business, while retaining a focused equity capital markets operation. The investment banking division of Deutsche Bank will focus on its traditional strengths in financing, advisory, fixed income and currencies. Thus, in future, we can see Deutsche Bank to consolidate its position in the capital markets on one hand while trying to optimize its underwriting business on the other hand.

(You can use the above material in your presentation).