Deutsche Bank Overhauls Fixed Income Sales Amid Cost Drive

Deutsche Bank AG is rearranging how it sells fixed-income trading products as it seeks to lower costs without sacrificing revenue from the company’s biggest source of income.

The new model will divide the coverage team into two groups, one focusing on flow and liquidity and another on client solutions. That’s in an effort to provide purely electronic or voice offerings to one set of clients, and more advanced -- or bespoke and, therefore, more expensive -- service to another.

The bank will pilot the new structure among its team for European rates and credit flow products in an effort to “dynamically manage the firm’s client perimeter,” according to a press release on Wednesday. Around 80 staff will be affected, the unit’s managing director, Mark Tiernan, said in an interview.

Though the aim of the project is to “reduce the cost of trading,” the lender isn’t currently planning any job cuts as a result of it, Tiernan said.

Deutsche Bank under Chief Executive Officer Christian Sewing has been beefing up its credit business as it seeks to benefit from a global trading boom that’s led to soaring revenue in its securities unit. Income from buying and selling debt securities rose 34% in the first three months of the year, compared with an average 17% gain for the largest U.S. investment banks, and credit trading performed particularly well.

The new coverage model will be rolled out later to other parts of the bank if it proves successful, a spokesman said.

The fixed-income trading unit headed by Ram Nayak is under pressure to keep contributing to Deutsche Bank’s cost-cutting effort. Most of the future savings are to come from lower back-office costs by decommissioning IT and replacing manual work with machines after an aggressive headcount reduction through the previous two years.

The lender’s investment bank, of which fixed-income and currency trading is the biggest part by far, has vowed to keep revenues stable this year while cutting expenses by almost 10% by the end of 2022.

©2021 Bloomberg L.P.

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