Deutsche Bank AG increases headcount and directs resources to the region anticipating that would bring about a recovery in its Latin America’s revenue, reversing a withdrawal that started in 2015.
“This is going to be our best year in Latin America in terms of revenue for the past six years, and that is just a reflection of investments we’ve made to our global emerging-markets platform,” Ricardo Cunha, head of global emerging markets for Brazil, said in an interview.
The Frankfurt-based lender increased its capital in Brazil by 100 million euros ($105 million) last year and dedicated the same amount to Mexico in September.
During a global cost-cutting initiative that started in 2015, Deutsche Bank reduced its workforce and closed businesses in various Latin American countries. It just begun growing once more, increasing both its onshore fixed-income, commodities, currencies, and derivatives local trading book as well as the local team in Brazil that supports hedge funds. In Mexico, the bank has established a staff and a branch for its recently reopened broker-dealer operations.
Within the past 12 months, the company has hired 15 people to work in its broker-dealer office in Mexico, bank in Brazil, representative offices in Colombia and Argentina, as well as in New York and other locations of its global emerging-markets platform, which employs roughly 400 people. It has also been moving employees from its US companies to its local affiliates.
Isander Santiago-Rivera, a managing director for sales coverage in global emerging markets for Latin America based in New York who previously worked for Credit Suisse Group AG, was one of the top executives hired this year. Additionally, Deutsche Bank made investments in its offshore private banking division, which serves Latin American clients through booking offices in the US and Switzerland.
“We haven’t grown the business in the past three years by simply hiring people and spending money, but mainly by finding efficiencies within the firm — we are extremely focused on cost,” Jorge Sanchez-Lara, head of global emerging markets for Mexico, said in an interview at the bank’s New York office.
Deutsche Bank, which used to have a full-fledged bank in Mexico, this year relaunched a broker-dealer business there focusing on fixed-income and currency trading and derivatives, risk management and finance solutions. In November, Citigroup Inc. said it agreed to buy Deutsche Bank’s banking entity and license in Mexico.
“We decided on the broker-dealer in Mexico because we believe that’s the most efficient entity that we can use to cover our clients there,” Sanchez-Lara said. He also added that Deutsche Bank’s total capital in Mexico now is around 125 million euros.
The Mexican government issued an 800 million euro, 8-year global bond in February, and the German bank was one of the joint lead managers of the transaction. In 2019, Deutsche Bank relocated the country’s fixed-income and currency trading book from New York back to Brazil, where it now operates a bank with 3 billion reais ($556 million) in equity.
Recently, the company dispatched a trader from Brazil to work out of Singapore in order to expand Brazilian business in Asia and provide liquidity to Brazilian clients there and throughout the region during Asian hours.
“As a global bank, we can deliver the whole global platform to our clients in the region, and vice versa,” Sanchez-Lara said.
Deutsche Bank has also reportedly participated in the Brazilian local bond market this year, focusing on structured credit and real-denominated acquisition financing. The bank is also active in a number of industries, including digital infrastructure, fiber optics, data centers, towers, and chemicals.
According to information recently made publicly available, it underwrote five municipal bond issues in Brazil totaling around 1 billion reais in credit. The bank participated in the underwriting of a 1.65 billion real bond issued in March by the portfolio company of US private equity fund Digital Colony, Highline do Brasil. A portion of the sale’s proceeds will be used to refinance loans taken out to buy things like the mobile assets of Brazilian carrier Oi SA.
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