[ N E W S
custody business.”
Similarly, Ludbrook explained the
addition of securities lending to the
corporate banking and securities services
business would also bring new revenue
opportunities with its custody clients.
“I see the incorporation of securities
lending as an increased business
benefit – as well as getting the synergies
from people working together, the
overriding factor of putting these two
businesses together is the cross-product
opportunity,” Ludbrook added.
To further build up the securities
lending arm, the bank has stepped up
investment into technology resources
devoted to the business, with a particular
focus on recruiting engineers and coders
which Flohr explained will bring a new
“innovative mentality to our securities
lending product.”
One particular area of innovation
the team is working on is opening the
securities lending business to non-
traditional revenue streams. In 2019,
revenues from the global securities
lending business declined 13% as trade
wars, Brexit and central bank actions
weighed heavily on hedge funds.
A key objective for the team is to take
greater advantage of the bank’s global
infrastructure and provide new services
that are not as impacted by macro
uncertainties to its wider corporate
banking clientele.
R E V I E W
“Corporate banking is in Deutsche
Bank’s DNA, and there are many ways
we can open up this product to offer
solutions to these corporate clients. This
could help deepen relationships with
them while uncovering a new audience
for our securities lending solutions,”
said Flohr. “We want to use our existing
infrastructure in a more expansive
way and make securities lending more
sustainable and scalable.”
One way the team is rolling out this
philosophy is through the development of
outsourced funding capabilities for firms
that do not have the scale and technical
resources to manage their own Treasury
operations. This would provide the
securities lending business a new source
of sustainable revenue.
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D E U T S C H E
B A N K ]
“To reinforce the sustainability of
revenues, we are using our infrastructure
in different ways such as becoming
an extension of the funding/treasury
desk for clients that do not have the
capacity or scalability to build out a
solution internally,” explained Maurice
Leo, director, sales and relationship
management EMEA, agency securities
lending, Deutsche Bank.
“This will involve clients using our
legal, distribution, execution, operational,
reporting and risk services, where we
would raise, or invest, cash on their
behalf under a product management fee
framework. In this way we are using our
existing infrastructure and competencies
to deliver financing solutions that
diversify and insulate the business
against the increasing cyclicality of
traditional securities lending returns.”
By using this model, Deutsche Bank
hopes to bring on a wider range of clients
that are able to opt in to use either
the whole securities service franchise
or rather pick and choose which
outsourcing services to utilise.
“With a scalable product, we have
a broader securities services engine
that clients can use a piece of, as well
as being able to come on board for the
full traditional product. That will allow
us to take on pieces of new outsourced
business, helping to fuel new services in a
bespoke fashion,” added Flohr.
Spring 2020
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