It’s always fascinating to observe how Americans are perceived by people from other places: depending on the country and the circumstances, common stereotypes range from unhealthy food to ruthless capitalism and being a workaholic.
In the banking world, the reputation isn’t particularly rosy either, but of a system that will lure you in with a better rate and then drop you when the economy turns or you’re no longer needed. That was the charge made by at least one European bank warning customers against borrowing from Americans.
“A number of European companies are already realizing the risks of not doing business with companies that are long-term committed to geographies […] in which they operate,” Fabrizio Campelli, a member of the Deutsche Bank board of directors who oversees corporate and investment banking, said in an interview with Reuters.
With total assets of $1.476 billion in 2021, Frankfurt-based Deutsche Bank (db) – Get a free report it is currently just over the world’s 20 largest banks, but far behind American giants such as JP Morgan Chase (JPM extension) – Get a free report and Bank of America (BACXL extension) as well as the French BNP Paribas (BNPQF) .
Corporate speeches: “They don’t love you like we do”
While Campelli uses corporate jargon and very carefully avoids ever mentioning specific names like Chase or Goldman Sachs, his message of “mercurial and profit-driven American banks versus stable and loyal German banks” still shines through very clearly.
“There was evidence of non-German banks in this country pulling loans off the table as German banks were extending longer credit during the pandemic in 2020.”
He further added that US banks “tend to flex loans up and down depending on the circumstances.”
This advice is by no means revealing as banks will always struggle to keep as much of their customers’ money as possible. The struggle is particularly acute in Germany. According to Dealogic data processed for Reuters, the share of loans granted to German companies by the big five of the American banking sector (JPMorgan, Bank of America, Morgan Stanley (SM) – Get a free reportGoldman Sachs and Citigroup (c) – Get a free report) has gone from 18% to 35% in the last 10 years.
The ongoing fight for wealthy corporate clients
This means, in other words, that German banks are losing valuable customers and loan payments that could have gone to them instead. While the fight against US banks ramping up their presence in Germany and poaching wealthy corporate clients goes back years, Deutsche Bank recently amplified its “stay local” message.
At a banking conference Nov. 18, Deutsche Bank chief executive Christian Sewing warned of the “danger” of relying on foreign lenders.
“We urgently need to change tack here if we are not to rely primarily on foreign banks to finance Europe’s future,” Sewing said. “And no one should take this danger lightly.”
The heads of the European divisions of US banks have largely rejected these claims. Stefan Behr of JPMorgan’s European operations, told Reuters that “many of the German banks work with us on deals as well as we are their banking partners.”
Perhaps the insecurity stems from the fact that Deutsche Bank has faced a series of struggles in recent years. In October, the company’s headquarters and the home of a former co-CEO were raided in a tax investigation, while the latest quarter was the bank’s worst since the financial crisis.
The bank has also had extensive relationships with former President Donald Trump.
Trump allegedly provided fraudulent documents to the bank to obtain favorable loans, according to charges by the New York attorney general’s office against the former president and the Trump Organization.
Shares of Deutsche Bank are down 11.85% year over year and more than 43% since 2017.