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November 19, 2020

Deutsche Bank toughens reins on lending to super-rich clients

Deutsche Bank has reportedly made the terms harder for lending to its super-wealthy clients since the beginning of the Covid-19 crisis.

Deutsche Bank head of its International Private Bank Claudio de Sanctis told in an interview to Bloomberg: “We took a more conservative approach to collateral from sectors and industries affected by Covid-19.” In this context, he highlighted aircraft, commercial real estate, retail as well as travel.

In the Q3, the German lender had €46bn ($54.6bn) of loans outstanding to the sectors highlighted by Sanctis, in addition to oil and gas.

These sectors accounted for around one-third of the bank’s total credit provisions in the quarter, noted Bloomberg.

The wealth management arm of the bank reported “deleveraging” in Q1 followed by “a strong rebound” in loan growth in the subsequent two quarters, stated de Sanctis.

This has also carried into the current quarter, he stated.

Sanctis was recently handed over charge of international private bank, which was formed by integrating its wealth management and its international private and commercial business units.

The integration in anticipated to result in significant cost savings.

Recently, Deutsche Bank Americas head Christiana Riley too said at a Bloomberg event that the bank has “dialed back” its risk appetite for commercial real estate, a segment that is one of the bank’s important revenue source in the US.

Deutsche Bank has been going through a massive overhaul after several failed turnaround initiatives that included the collapse of a merger attempt with Commerzbank.

The restructure will involve 18,000 redundancies. The bank had put the downsizing exercise on hold in March to support its employees during the Covid-19 pandemic but resumed the retrenchment programme in May.

Some of its executives agreed to take pay cuts to help the organisation cope up with the pandemic.

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