What is Deutsche Bank all about? Once a warty toad in the corner, the German bank has since grown shiny locks and attracts all sorts of senior citizens. 11 months ago, Fabrizio Campelli, head of corporate and investment banking, said 50 senior bankers had been hired since early 2023. Today, Campelli puts the number at 75 CEOs and directors and a total of 125 bankers. All arrived within the last 18 months.
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Deutsche Bank’s allure may have something to do with a 54% increase in its combined M&A and equity and debt capital markets revenue in the first quarter of 2024, but Campelli says it’s more than that. The DB ‘brand’ is more attractive than it was, he tells the FT: ‘They want to come here now. They’ve seen the stock double over the last five years,” he says of the bankers who flock from far and wide.
When your bonus is paid partially in deferred stock, it depends on the stock price doubling. But Deutsche Bank’s appeal goes far beyond direct compensation: it always offers above-market salaries, especially in the US, and has a reputation for paying generous guaranteed bonuses. Now it also has a growth story.
Along with adding 300 people from Numis last year, Campelli hopes his 125 new bankers will drive revenue. “Revenue generating” corporate finance bankers up 25%, says FT. It expects them to generate a 25% increase in revenue over the long term compared to pre-2023 norms.
Deutsche is not the only bank pursuing this strategy. Lazard is busy with something similar. This works as long as the income keeps coming. But there are signs at Deutsche Bank that fixed income sales and trading, which accounts for 83% of the investment bank’s revenue, is having a bad year. If this continues, there will be another difficult bonus round in 2025. Campelli himself got a big raise last year, but average bonuses for material risk takers in 2023 were the lowest since 2020, and there were complaints that the new hires drained the bonus pool for everyone else. If fixed income declines, expect a repeat when bonuses are announced next March and DB will be balder than it seems.
Separately, lawyers in London are finding that a high salary in your 20s is a double-edged sword.
The Financial Times reports that UK “magic circle” firms such as Freshfields Bruckhaus Deringer, Linklaters, Clifford Chance and A&O Shearman have recently increased their salaries by 20% to £150,000 for newly qualified lawyers, and that US law firms have increased newly qualified salaries to £ . 180 thousand
In return for this generosity, juniors are expected to work a minimum of 1,900 hours at US firms and 1,700 hours at magic circle firms in the UK. That sounds like a relatively tame 40 hours a week spread over 48 weeks a year, but that’s simply billable hours to clients and doesn’t include prep work. After the pay rise, the FT says juniors fear they will have to work even longer than before. “I’m interested in how it works financially [constantly increasing NQ pay] these people will have to work extremely hard. And what does that mean in terms of what you do with their lives? What does that mean for the quality of their work?” says one corporate lawyer.
Young bankers who themselves got a big pay rise a few years ago might agree.
Meantime…
UK regulators have ordered Barclays to review its leveraged finance business. (Bloomberg)
Sid Chaturverdi, who worked for Millennium’s Dubai office, joined Morgan Stanley in May. (financial news)
TD Securities has hired Chris Turner from Barclays as head of financial sponsors. (Bloomberg)
Caesar Maasry, a 19-year veteran of Goldman Sachs, joins Lunate Capital in Abu Dhabi. (Bloomberg)
Stuart Oakley, who recently moved to Dubai to lead Eisler’s Gulf expansion, was able to trade with new risk limits after posting losses in the low single digits. (Bloomberg)
How to Make Generational Wealth as a Cryptocurrency Trader. Prepare to lose seven figures and adopt a “This is your last chance to get rich before the fall of Western Civilization” attitude. (Bloomberg)
The integration of AI is also creating new roles and career paths. Take the AI algorithmic trader and financial analyst, where machine learning can be used to dig deeper into financial data, predict market trends and automate processes. (FT)
“Great revenue producers are terrible managers. It’s a real problem. Empathy, listening skills, a lot of these people don’t have that.” (FT)
People who fight at parties. (Paris Review)
Why not bring your parents to the interview? (Guardian)
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