The modern history of the bank is of a split between those Vorstand directors and executives that wanted to keep the bank essentially German and those who embraced international expansion and the conquering of Anglo-Saxon-style financial markets.
It gained a unique position at home, unchallenged as the hausbank for many of the country’s leading corporations through cross-shareholdings and reciprocal board seats.
But because the savings banks and the Landesbanks were not answerable to public shareholders and pursued a social mandate rather than a financial one, Deutsche never had the fallback of a profitable domestic retail business to extract profits from. It had to set out to partner its German clients with commercial banking services outside Germany.
But it faced the same problem then that it does today. US investment banks, bolstered by profits from their own high-margin and yet impenetrable home market, began making inroads into M&A and capital markets for German clients not only abroad, but even at home in Germany.
Deutsche Bank knew it had to build investment banking in a defensive way, to protect its home market and see off the invaders. In 1990 it made a false start, buying Morgan Grenfell, hiring high-cost and sometimes temperamental M&A advisers uniquely unsuited to working alongside German commercial bankers wedded to process and consensus management. It spat them out.
It seemed to be winning, although it perhaps enriched a generation of bankers far more than it did shareholders. But it almost looked easy.
Instead of being beaten out of sight by the Americans, it started to acquire them. In 1998 it bought Bankers Trust, the ultimate derivatives house.
These were clever men, though touchingly naïve with it. It was hard to work out the details of the trades and products they were talking about because they withheld the secret recipe. But it was obvious to anyone that these people were punting prop trades for their own benefit and using their clients to dump the risks they did not want. Deutsche Bank had more counterparts than it did clients.
While Deutsche Bank rose towards the top of investment banking it became renowned, in a tough industry, as being one of the most poisonous places at which to work, with a culture of back stabbing and blame, as well as that approach common across investment banking of doing what was legally defensible with counterparts, rather than what was always in the best long-term interests of clients.