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Deutsche Bank overhauls treasury unit to use excess cash

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Deutsche Bank overhauls treasury unit to use excess cash

Deutsche Bank AG is restructuring its treasury function to use excess liquidity reserves of about €30 billion to retire expensive liabilities and invest in assets with higher returns, the Financial Times reported, citing Dixit Joshi, the German lender's treasurer.

The bank has combined all of its treasury markets and investment activities into a single team and appointed former Barclays and Bank of England executive François Jourdain as its head, according to the Aug. 27 report.

"What we are seeking to do is to offset the drag of parking cash at the central bank in a negative rate environment," Joshi told the newspaper.

Deutsche Bank will also invest some of the excess funds in longer-dated assets, such as highly collateralized loans or asset-backed securities, that could earn even more, Joshi said.

The bank estimates that it could add €300 million annually to its revenues by repositioning its liquidity reserves to a more equal balance of cash and securities, the FT noted.

Deutsche Bank has received regulatory approvals for the overhaul following improvements to its models, data controls and governance, Joshi added.

Jourdain, who was previously chief compliance officer for Barclays' international unit and head of the bank's treasury funding operation, will oversee several operations at Deutsche Bank, including public capital markets issuance, private bond placements, liquidity pool management, money markets operations and central bank balances.