I am here with Christian Sewing who's CEO and chair of Deutsche Bank, Germany's biggest lender, here in Washington DC for the IIF, the IMF, and everything else under the sun. Christian, thank you so much for being here. It's really a treat to speak with you. I want to go over a couple of the big themes that we see this week: the US election, the growing divide between US and European economies, and geopolitical risks. I want to start with the US election. How different is it between US and European bank officials when they talk about the US election?
I think there is not so much difference. Obviously we are all observing it. I mean, we had a year of elections throughout the world, half of the world's population went to elections, so obviously everybody is focused on this one. I think from a European or German point of view, in particular we are all focusing on what happens and what is the impact on the economic development, and in particular with regard to trade and tariff. In this regard, there is obviously a lot of discussions in Europe. I'm always telling my clients, irrespective of the outcome, we all need to take into account that we have seen so many changes from a geopolitical point of view over the last five to six years that we need to adapt either way. It means that actually Europe needs to work on its home market. We need to make sure that our home market is becoming bigger, that we are really living one home market in Europe in order to be actually strong enough to compete with the US. Maybe that under President Trump, obviously from a tariff point of view the situation will be even more challenging for European corporates, but we need to take the right steps right now. We need to prepare, and therefore, not only watching but making sure that we adapt. I think that is the right solution, and that is the advice we as a bank give to our clients.
Do you see any signs that there is a willingness or ability of people, particularly in Germany, to adapt at a time where there's a real question about the main industry, which is auto manufacturing, and competition from China?
Look, it looks potentially from the outside that there is no willingness and that the urgency is not understood, but I can tell you the willingness and also the understanding is clearly there. Obviously reports like the Draghi report but also the Letta report earlier this year are helping. Now we have a complicated system in Europe with 27 member states, and obviously it takes time, but I would say that the understanding in Europe that we need to move, that we need to rethink the way we are defining our European home market, that we need to think about what can we do about energy prices being competitive in this regard, that we need to think about actually reducing bureaucracies in order to allow investments, and finally, in this regard I'm actually quite optimistic.
The tone when you think about also the financial industry, the criticality of the financial industry, that Capital Markets Union is now on top of the agenda of Brussels but also of the main European countries, tells me that the message is understood. Of course we all wish that we execute quicker. Okay, so let's go there. You're talking about the unification of a financial union at the same time that there was a lot of dissent from German regulators about the idea of UniCredit buying Commerzbank, and a real question about whether that could go through. Do you think that there is a necessity for consolidation in the European banking sector in order for that strength to really happen?
In general, I think yes. There is, and we always said that. I have said that for the last six years that if we think about the European banking environment and the banking industry, we are kind of overbanked. If you think about what is really needed when we think about the future, lots of investment into technology, if you think about the regulatory environment, I do believe that scale is important. But we also always said from a Deutsche Bank point of view, first of all some preconditions also on the regulatory side need to be done. Sometimes, where we are right now, consolidation is not that easy from a regulatory point of view where we stand, not finalized banking union and so on. And from a Deutsche Bank point of view, we always said, look, we have a clear strategy for 2025. We want to increase our return on equity and we are on a very good way to above 10%, and therefore we are focusing on ourselves. But industry-wide, it must come and it will come over the next years.
Do you think though that there would be a much bigger competitive advantage for Deutsche Bank to be a bigger bank, especially when facing off with the JP Morgans and the Bank of America and the Citigroups of the world?
Well, first of all, I'm very proud that in those businesses where we are today, we can face off also the American banks and we have a good market share. If you think about the investment banking, the corporate bank, honestly we are among the top banks and I'm really proud. Where we focus on, we are among the leaders. And you know, it's all a matter of time, but for the time being and for the next years, Deutsche Bank has such a potential to grow its profitability by itself, to grow. And look from where we are coming: I took over the bank with 24 billion of revenues, now we are heading towards 30 billion revenues in 2024. We reduced the cost. Why shall I look outside if I can do the next steps on my own? That's my whole focus. You know, I'm not talking about the years after, the next years, but for the time being only focus on ourselves.
