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Case Title:

Deutsche Bank: Going Retail in China

Publication Year : 2010

Authors: S Chaudhuri

Industry: Banking, Insurance and Financial Services

Region:China

Case Code: IPD0111IRC

Teaching Note: Not Available

Structured Assignment: Not Available

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Abstract:
Deutsche Bank had gained tremendously from scale economies, as it had strategically moved out from commercial banking to concentrate on investment banking. Globally, Deutsche Bank had focused on corporate investment banking (CIB) and in 2005, 78% of its income came from CIB and investments made with the corporate sector. But the bank had surprisingly taken different business strategies in China. It had stayed out of corporate and investment banking and concentrated highly on private clients and asset management (PCAM) business, especially on private wealth management (PWM). The bank had also gone to the extent of aggressively promoting its credit card; the bank had opted not to enter into many high growth card markets. Deutsche Bank, which had started its operations in China in 1872, in order to conduct foreign exchange operations, would set to gain as China allowed foreign banks to conduct renminbi (RMB) business for the Chinese citizens from 11 December 2006. But, focusing only on private wealth management business might not turn out to be a fruitful business proposition for Deutsche Bank in the long run, as other global banking giants were aggressively entering into mass banking, in order to gain from the world's fastest growing major economy.

Pedagogical Objectives:

  • To understand the changes in the banking sector after China's entry into the WTO (World Trade Organisation).
  • To understand the pros and cons of concentrating on a niche banking market.
  • To have a brief understanding of what challenges Deutsche Bank will face as a result of concentrating on the Chinese private wealth management market.

Keywords :  Asset management, Corporate banking, Private client, Investment, Restructuring, WTO (World Trade Organisation), Renminbi, Foreign exchange, NPL (non-performing loan), Hua Xia, Credit card, Fund management, IPO (initial public offering), Leveraged buy out, M&A (mergers and acquisitions)

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