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OPINION

Deutsche's restated earnings show how much ECM will shrink without equities

The bank has rejigged its historic numbers to reflect its new structure, but the result throws up an interesting glimpse of just how small its equity capital markets business will be in future.

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An odd little detail of Deutsche Bank's restated historic earnings to take into account the firm's new structure has revealed how much its equity capital markets business gained from the existence of the bank's secondary equities franchise, which it is now exiting.

Deutsche, like many firms, operated ECM as a joint venture between investment banking and equities. For reporting purposes, however, it grouped ECM-related revenues as a single line in the management accounts, within the origination and advisory business. It meant that equities revenues that were related to ECM activity were reported within ECM rather than within equities.

Ahead of its third quarter earnings, which are due to be announced tomorrow (October 30), the bank on October 14 restated its historic accounts, going back to full-year 2017. The purpose, as with all similar restatements, was to present accounts that could be more easily compared with future earnings statements.

The restated accounts are organised according to the new structure, so corporate banking areas, including global transaction services, have been moved into the new corporate bank, while investment banking and capital markets businesses remain in a new investment bank division.