Miles Millard’s latest appointment is a sign of Deutsche Bank taking another step on its journey toward a unified client coverage structure.

When Miles Millard was appointed co-head of corporate finance for Europe, the Middle East and Africa at Deutsche Bank in February 2014, it marked the latest evolution in a process he has been personally involved with since 2010. That was the year his debt capital markets (DCM) team was combined with the treasury team that had previously been part of Deutsche’s markets division. He became the first head of the combined capital markets and treasury solutions (CMTS) business, which was brought under the corporate finance umbrella as part of what then became known as corporate banking and securities (CB&S) in 2012.

“When investment banking and markets came together in 2010, we moved CMTS into corporate finance so that we could work more closely with our colleagues on the banking side to offer a full set of products and services from C-suite to treasury clients. The latest move is just one more step on that journey,” says Mr Millard.

The long-term aim for corporate finance was formalised and reinforced by the Strategy 2015+ set out in September 2012 by the new co-chief executives, Anshu Jain and Jürgen Fitschen, three months after they took over running the bank. This, says Mr Millard, is to target the bank’s largest global clients in the most efficient and effective way possible and align the coverage teams from senior management relations to treasury sales. CMTS and the bank as a whole had already moved some way down that path, and his new appointment is an extra refinement.

“This really makes sure that we are putting our clients at the centre of decision making and engaging with them at all the points where they need our products, solutions and services,” says Mr Millard.

New client priorities

The creation of CMTS coincided with a change in the needs of clients following the financial crisis. Prior to 2008, topics such as access to finance and counterparty credit risk had been tackled at corporate treasury level without preoccupying senior management. That has now changed, and Mr Millard says this raises the importance of ensuring that Deutsche’s approach to clients is conducted in a fully connected way.

“Another change is that companies in the high-growth markets in Asia and elsewhere are becoming increasingly international, and companies from developed markets are increasingly looking towards emerging markets. Such companies need a bank such as Deutsche Bank with deep local coverage and knowledge, coupled with an international footprint and capability to service those needs,” says Mr Millard.

Like the change in client priorities, this geographic change has shaped the creation of CMTS and the strategic review to 2015. Mr Millard says the second stage of the development of his business unit has been to bolster the capacity to work with multinational company subsidiaries worldwide.

“With a strong presence and capability in Asia, we wanted to make sure that we bring that to the benefit of clients in Europe and North America. We are adding to our corporate banking team within CMTS to make sure that we address that opportunity, so we really move beyond covering clients in their domestic market to also servicing their overseas subsidiaries. The largest multinationals have treasury teams in multiple locations,” he says.

Mr Millard emphasises that the CMTS approach is centred on the client and “product indifferent”, acting as the client interface for the full range of products that Deutsche can offer. That includes a series of teams across rates, credit, foreign exchange and origination of plain vanilla and structured finance. The CB&S division of Deutsche is separate from the global transaction banking division. Interestingly, however, the CMTS team has responsibility for client coverage for corporate transaction banking products such as trade finance and cash management.

“There are a lot of obvious synergies in that all of these products, from foreign exchange through rates and credit to export finance and cash management, revolve around the treasury and finance space. By bringing the client delivery of these products under one team, we were able to better align their delivery around clients’ needs. We believe this has had a big impact on the growth of our corporate trade finance, cash management and foreign exchange businesses,” says Mr Millard.

Building on recovery

With market assumptions that interest rates have bottomed out, Mr Millard does not expect fixed-income issuance to match the levels seen in 2013, but the DCM business is still very active. And as executives gain the confidence to undertake mergers and acquisitions, he anticipates more event-driven financing needs.

“There is a lot of activity in the telecommunications and cable sectors particularly. At the moment, the activity in the second-tier corporate sector remains subdued, so we’ll wait to see if this picks up in the coming months. Financial sponsors are utilising the strong equity markets to exit investments, particularly here in Europe, and we expect that to continue,” says Mr Millard.

Volatility has cooled primary debt issuance, but Mr Millard believes there will be fresh momentum if things calm down, especially in high-growth economies that need financing. Emerging market assets staged a relatively rapid recovery from the setback of tensions between Russia and the West over Ukraine in early March 2014.

The gradual recovery of world trade is also stimulating Deutsche’s trade finance business. Moreover, the emerging market currency volatility has prompted higher levels of corporate foreign exchange hedging.

“The US economy recovered sooner than Europe's, and this led to the strong performance in the US markets in 2013. There are now signs that Europe is beginning to recover, and there is still growth in emerging markets despite the volatility. This will generate a lot of opportunity, and the challenge is for us to capture as much of that as we can – we are not sitting around wondering where the next deal will come from,” says Mr Millard.

He believes that the work the bank has already done to integrate CMTS, together with the further alignment within the corporate finance group, will ensure that the bank succeeds in seizing the opportunity.

One bank, many markets

Deutsche’s own efforts are taking place in an environment where other banks are reconsidering their business models. Fixed-income businesses, heavy on balance sheets that have become more costly due to market conditions and regulation, are being scaled back at many competitors. By contrast, Deutsche’s debt syndication business, known internally as global risk syndicate, is one of its core activities, as is the market-leading foreign exchange franchise. Mr Millard says deep global distribution capabilities are vital to the origination business, while institutional investors equally want a bank that can provide access to primary issuance across assets and geographies.

“You cannot have one without the other. Multinational companies do not want to deal with dozens of different counterparties to meet each of their needs, they want a counterparty who can give best price and best execution in as many markets as possible. One of the keys to our success in DCM is our ability to give global companies access to debt markets in all corners of the world. The same is true for meeting their foreign exchange needs. There are only a handful of banks that can really offer this, and the barriers to entry are becoming higher,” says Mr Millard.

However, the competition is still fierce among the players that remain, and local banks are strong in their home markets. Indeed, Mr Millard says banks that are withdrawing from global competition tend to focus even more resources on their remaining chosen locations.

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