Lots of big lenders claim to be great at serving entrepreneurs. In reality, however, most are not as good at doing this as they would have you believe. Meeting the needs of owners of thriving businesses can be complex, tricky and costly. It requires patience and a well-considered strategy, and a good many banks have neither.
Founded 150 years ago expressly to support the needs of entrepreneurs, Deutsche Bank thinks a little differently. Back in 2020, it created a new division called the International Private Bank (IPB), which combines the old private and international commercial bank.
Chief executive Christian Sewing then merged IPB with the German lender’s wider wealth-management business – part of his drive toward less cyclical and more steady income-generating services – and appointed Claudio de Sanctis to run it.
De Sanctis soon moved to create an internal ‘bank for entrepreneurs’ designed to deliver integrated commercial-banking and wealth-management services to the owners of mid- and large-sized family-run firms.
It is hardly a revolutionary idea, but because it is hard to do – you can’t avoid reconfiguring your private-banking model if you want to make it work – most banks prefer to stick with what they have.
Deutsche’s main Swiss and US rivals tend to prefer to treat individual entrepreneurs as two different people: the person who runs a family business and the one who owns the wealth that company creates.
As de Sanctis told Euromoney in February, his rivals prefer to talk to their clients about “either the company, or private wealth. We see the two as one.” This approach to private banking is what entrepreneurs so often cry out for but are rarely given.
The bank for entrepreneurs was first unveiled in Italy in 2021, then a year later in Spain, where it is overseen by Juan de Gonzalo, and where it generated 80% more net new assets in 2022 than it did a year earlier.
The strategy shift has been an undeniable success
The division provides all the services a demanding business owner expects, from wealth advisory and liquid asset financing, to structured-financing solutions and discretionary portfolio management.
Deutsche’s relationship managers also help clients navigate more personal financial issues, from estate and trust planning, to life insurance and philanthropy, even as they continue to run a complex family business.
The strategy shift has been an undeniable success.
In 2022, Deutsche generated net profit of €5.7 billion, a 15-year high that handily beat analyst expectations. Its private bank was a key driver, posting €2 billion in pre-tax profit in 2022, up more than five-fold from €355 million a year ago. It kept a lid on costs too: the cost-to-income ratio of its private bank was 72% in 2022, against 75% for the core bank.
So, what is next? Well, de Sanctis wants to roll out the bank for entrepreneurs in Belgium, another big European market in which Deutsche has a robust presence. He also has plans to expand it to Asia and the Middle East, where it will sit alongside the corporate bank.