Deutsche Bank faces an uncertain future, may exit India equities biz too

Deutsche Bank | Photo: Reuters
Deutsche Equities India (DEIPL), the domestic investment banking and equities trading arm of Deutsche Bank, faces an uncertain future. Sources say DEIPL is in the process of unwinding its India operations, following Germany-headquartered parent’s decision to exit the equities trading business globally. 

On Sunday, the beleaguered Deutsche Bank announced major overhaul of its business, which included discontinuing loss-making equities trading business, creating a new ‘bad bank’, and cutting 18,000 jobs. 

DEIPL employs 35 people, all of whom could face the job axe, said people in the know. When questioned, Deutsche Bank India spokesperson said it is too early to tell how the global announcement will impact domestic operations.

“It is too early to comment on specific details. We will be communicating directly with our employees regarding their jobs and options available to them. We absolutely understand that these types of decisions affect people’s lives in a profound way.  That is why we will do whatever we can to be as responsible and sensitive as possible when implementing these changes,” a spokesperson said in an email response. 

When it comes to the Indian markets, DEIPL didn’t have significant presence in the investment banking business space. However, it had quite a large presence in the equities trading business, which involves dealing in shares on behalf of foreign portfolio investors (FPIs). 

This year, DEIPL has been part of only one primary market deal — that of the highly successful Rs 3,800-crore initial public offering of Embassy Office Parks real estate investment trust.

“DEIPL has stopped accepting fresh orders in the equities segment. It is in the process of unwinding existing FPI and participatory notes positions held by its clients,” said a person with knowledge of the development. 

Industry players said until a few years ago the equities research business of DEIPL was amongst the best in business. Last year, DEIPL’s Head of Research Abhay Laijawala had quit unexpectedly after spending 10 years at the firm.  DEIPL is currently headed by Pratik Gupta.

The announcement at Deutsche Bank follows similar moves by European peers, including Barclays and Standard Chartered (StanChart). In 2016, Barclays had closed its India equities business to cut costs. The move by StanChart to shut its institutional equities and investment banking business in 2015 had surprised the Street.

Industry players say the equities trading business has never been a great money-making opportunity for global banks. However, it has always been a key important business operation for any full-scaled investment bank, as it provided clients across the world accesses to any equity market.

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