The US is the largest wealth market in the world, and the one with the highest concentration of accessible billionaires. While Deutsche Bank sees unique opportunities in Europe, the growth potential in American private banking is almost unmatched, and we already have a strong track record here. In the past four years, we have averaged high single-digit to low double-digit growth rates in the US, and while we are a European Champion for global business, we continue to see strong opportunities for growth in the US. That's why we can reasonably expect further investment in building out our capacities here – although at a measured pace, since we want to preserve our business structure as a boutique private bank.

In my 20 years in private banking, I have never encountered a shortage of competition – especially for the attention of ultra high net worth clients. However, we clearly set ourselves apart from large competitor US banks, because we have never aimed for that amount of marketshare. Our baseline is different, thus we have a large runway to grow. And we find strong pockets of growth in the ultra high net worth space, where the pool of potential clients is much smaller, but the returns on a headcount basis are higher.

There are a few very important pillars. First, we will probably put more emphasis on growing our West Coast business than we will expanding the East Coast business. In New York, we already have a very strong foothold, and we have also been putting emphasis on the Southeast in the past three years, which has paid high dividends for us. While the pockets of wealth in the US might not be as concentrated as in Asia or Europe, we still see a lot of potential for us in Los Angeles or San Francisco. Our goal is to triple the revenues from our West Coast business in five years.

It’s definitely important to have boots on the ground to connect with clients. We are building out what I call fully integrated offices, staffed with both sales people and product managers. Investors and banking clients want to have access to high quality advice and strategy in their home market, without necessarily having to connect with someone in New York, or even Europe, to make a decision. We followed that recipe in Florida and were able to grow our revenue from that business threefold in roughly three years. Now we are heading towards quadrupling it.

We value our company culture, and we want to hire people who fit the profile. We truly are a boutique – a private bank that operates like an investment bank. That means our decision-making structure is flat – high ranking personnel like our Chief Investment Officer are available to speak to clients at any time, and share information about current developments on their minds, like rate cuts or geopolitical turmoil. A model like ours would be much harder to implement at some of our competing banks, because they serve a much larger constituency of advisors and clients.

Deutsche Bank is an established brand in the United States. We have done business here for decades. Our corporate and investment bank in the US is large, especially compared to European competitors, and the acquisition of Bankers Trust in the late 1990s increased the name recognition in private banking. We also benefit from the interest of European clients who want to invest in the US, as we can offer them dedicated solutions. In addition, we are the only European private bank in the marketplace that does highly structured lending transactions, which helps set us apart from the competition.

In contrast to the 2008 financial crisis, the regional banking collapse wasn't rooted in solvency issues or a chain reaction in investment banking, but in concerns about liquidity and the quality of deposits. We noticed that in this environment, many wealthy families and family offices preferred to work with a counterpart that sources its deposits in a jurisdiction outside the US. We have a large retail distribution network in Germany and Europe that resonated with clients' desire for safety.

The large majority of our clients are centi-millionaires and active wealth builders, who tend to be prodigious borrowers, using a combination of equity and debt capital finance their activities. We interact with them on the lending and on the investment and liquidity management side. As the cost of capital comes down due to rate cuts, they will engage in more deals and projects. That will drive demand for our solutions, and help us grow further.

Yes, as the Fed cuts rates, we will probably earn less in yields on deposits. However, there is counterbalance to that, as family offices with significant liquidity have been very content to be invested in shorter-term fixed income instruments that offer yields of 5% and very little risk. Now, risk appetites are likely going to grow again, and market participants will shift from fixed income into equities, where fee structures are different. Overall, I believe that rate cuts are beneficial to our business.

We bring about six to eight bespoke co-investment transactions to our clients per year. These usually come out of the investment bank – being able to cross-promote is one of the advantages we have as part of a larger financial institution. It is definitely attractive for clients to know that they are investing alongside us. But I doubt that this is the main reason they come to Deutsche Bank. As stated before, I believe what attracts them is the boutique structure of our business.

In the ultra high net worth space that we focus on, we lies, we less with clients directly and more with family offices. That means discussions focus a lot on long-term strategy, on working with the next generation, and meeting their investment objectives. I think there are very few competitors that can match our international planning expertise, and we want to draw more focus onto that, and the advantages we offer as a long-term trusted advisor.

The challenge for hedge funds and private equity managers in the private credit space is their high cost of capital. Private banks are usually very good at keeping that low, and generating high returns on capital, because they are not lending money to clients to bolster their cash flow, but to clients who are borrowing out of choice to create value. That males for low losses over time, and high quality credit that does not carry increasingly large spreads. For nonbanks, however, larger spreads have been an important component of their business so far. But the sticky assets, stable interest incomes and high recurring fee revenues available in the private banking space are becoming increasingly more attractive to these players. Once they figure out how to keep their cost of capital down, they will be serious competitors.

I don't think we'll face stability issues because of this. This change will not happen abruptly, but gradually, giving all sorts of competitors in the market time to adjust. I also don’t think we'll see participants being boxed out, but some competitors will have to adapt and specialise further.