Claudio de Sanctis may not speak German, but he still made it to the top of Deutsche Bank, which he maintains is the last fully global bank. In an interview with finews.com, he says the world is facing unprecedented complexity and volatility.
Claudio de Sanctis, you grew up in Rome. Are you Italian or Swiss?
My father comes from near Rome, and my mother is from Bern. She comes from a long-established family whose roots are centuries back. It’s why I have both Italian and Swiss citizenship.
Yet you hardly speak a word of German. Why is that?
German never came up at home. My maternal grandparents emigrated to the United States in World War II and later returned to Antwerp, Belgium, where my grandfather became a successful entrepreneur. My mother grew up speaking French. Later when living in Italy, we spoke Italian and French at home.
Is working at Deutsche Bank without speaking German a problem?
Surprisingly, it isn’t. At the job interview, I brought this to the attention of Christian Sewing (CEO of Deutsche Bank). He didn’t think it was an issue given that the official company language was English.
«With Italian and French, I speak two of the country’s national languages»
And now I work out of Zurich, which is one of – if not the most important – international centers for cross-border wealth management. Besides, I travel a great deal as part of my job, and German is not much of an issue. With Italian and French, I speak two of the country’s national languages besides English and Spanish. Of course, the situation would be entirely different if I worked in German retail banking….
Before joining Deutsche Bank at the end of 2018, you worked for both UBS and then Credit Suisse. The Swiss banking industry likes to claim that it invented wealth management as we now know it. Are there any differences in the way Deutsche Bank approaches it?
That is a good question. I wouldn’t be able to say that our offering is completely different. But if you look at what we do better than others, three things set us apart. First, we have a clear ambition to be global, and that sets us apart from much of the competition.
But aren’t the big Swiss banks global?
Yes, but only in wealth management and, to some extent, investment banking. Deutsche Bank, on the other hand, has a global presence with a range of products and services. We maintain an extensive branch network in Europe, for example. Unlike other global competitors, we do not differentiate between the US market and international business. Our aim is always to serve customers globally. I’m talking about very wealthy private and corporate customers regardless of whether the customer is based in Frankfurt, Los Angeles, or Singapore.
The second point is the close relationship we have with our investment banking business. Our organization is designed to enable us to act faster than some of our competitors. I believe that we are the last major bank to have a focus that is consistently global with closely interlinked individual business units, be they in lending, trading, advisory, asset, or wealth management. I am convinced that this gives us a better overview of our and our clients’ risk situation. The last and almost most important point is that our bank is one for entrepreneurs.
Credit Suisse also claims this.
We have a very comprehensive approach to entrepreneurs, particularly in Europe.
You’ll have to explain that in more detail.
Besides Germany, we have a local presence that caters to entrepreneurs in Italy and Spain. Belgium will be added to the list soon. Our strategy is to provide a fitting range of financial services to medium-sized family businesses everywhere in Europe in the medium term.
«Our presence in Switzerland is strategically important»
They are probably the fastest-growing segment, and they are creating wealth with their entrepreneurial activities. They also don’t tend to make clear distinctions between their private and their company assets.
Where is Switzerland in all this?
We have a small but powerful corporate banking business. Given the intense competition in this segment, we focus on high-net-worth and ultra-high-net-worth private clients. At the same time, I don’t rule out expanding corporate banking if we find doing so meets client needs.
How can Deutsche Bank grow here?
Our presence is strategically important because it is one of our most important booking centers for cross-border wealth management, along with London, Saudi Arabia, and Singapore.
«I am currently having many discussions with client advisors about all this»
We serve a variety of regions from here, including the Middle East, and Latin America. We also cater to NRI (non-resident Indians) clients and other emerging markets as well as clients from Greece, Turkey, and Israel. All of them are growth markets.
German clients in Switzerland used to be of key importance to you. How is it going with them?
Today, our business is mainly with families who have long had ties to Switzerland or who are based here and yet often operate internationally. We intend to further expand this customer segment, especially in Geneva and Lausanne, so that we can provide services to customers from Monaco as well. I am currently having many discussions with client advisors about all this.
Is it easy for you to poach good people from Credit Suisse at the moment?
We have always recruited employees from all our major competitors. We don’t discriminate between people from the two big Swiss banks or any other global competitors.
Is this a particularly difficult time for wealth management?
There is no doubt that over the next five to ten years we are likely to see the most complicated environment we have ever seen. I don’t think there have been many eras that have been as complex and volatile as this one is now.
What makes it so complicated?
The financial sector has benefited from what is probably the longest period of expansionary monetary policy ever. The bill for that had to come at some point. Now inflation is here. It is exacerbated by the energy crisis and the Russian invasion of Ukraine. But it would have come one way or another. It was a logical consequence of the ultra-loose monetary policy in the recent past.
«We will have to deal with all these crises intensively»
In addition, we are experiencing political instability to an extent that we have not seen in a long time. We have to face not only the war in Ukraine but increasing tension between the US and China.
What is happening in Europe?
We will have to deal with all these crises intensively. But they also offer an opportunity for Europe to come together. If one assumes that it takes crises to make us all get better, we now have a unique chance to overcome intra-European differences. Whether the outcome will be a positive one is still an open question. And it will not be entirely painless.
Our focus at the moment is on structuring the portfolios and assets of our customers in such a way that they are protected from the instability we are experiencing.
In the meantime, you have parted ways with Russian customers for well-known reasons. How did that happen?
We started looking at our Russian customer relationships eight years ago. In that respect, it was not an immediate process. Nor did it start in Switzerland – but was global in scope.
How high were the assets that you blocked?
We can’t put a figure on that. What I can say is that the total amount was immaterial for us.
Has Switzerland abandoned its neutrality by adopting the US and EU sanctions?
My personal opinion on this is that Switzerland had to join the US and EU regimes. As a bank, we implement sanctions not just from the Swiss perspective, but globally, wherever we are active operationally.
Again, has Switzerland thus given away its neutrality?
That’s a complicated question. It is more of a political question than it is an economic one. In my view, Switzerland had no other choice. Those who disagree should keep in mind how much the Swiss economy, on which our prosperity is based, is interconnected with other countries, namely with the EU.
«The sanctions adopted by the west caused a shock, particularly in Asia»
I don’t even mean the financial sector so much. Take Nestlé, for example. The company has a larger market capitalization than all the Swiss banks put together. Or the pharmaceutical companies… anyone who speaks out against the sanctions should think carefully about whether we really want to put what is a solid and healthy economy at risk.
Did you get any astonished reactions from your international clients after Switzerland adopted the sanctions?
Not explicitly about Switzerland, but in general. The sanctions adopted by the west caused a shock, particularly in Asia.
Why?
On the one hand, the question arose very quickly as to where in the world one was still safe, and on the other hand, fears that further individuals might be affected if new, additional sanctions were imposed against particular regimes.
What role does Swiss banking secrecy still play?
Banking secrecy has changed enormously in the past twenty or thirty years. As far as Deutsche Bank’s clients are concerned, they are associated with a culture of discretion. That means discretion towards third parties, but not towards government authorities, particularly as Switzerland now has an automatic exchange of information (AEOI) with more than 100 countries.
What exactly do you mean by a culture of discretion?
In Switzerland, I don’t have to teach discretion to anyone who starts at our bank. Discretion is an integral part of Swiss banking. In other words, as a wealth manager, discretion is in my DNA.
What are the next trends in wealth management?
If I am asked like that, I would have to answer. Wealth management is always very individual. Trends vary from region to region and even more depending on clients. I’ll give you examples. For the very wealthy private clients with $30 million and more in assets, digitization is at best a nice to have, but hardly a megatrend. In the lower segments, on the other hand, it is essential, or fundamental.
«People who invest their savings want to talk to someone they trust»
I also don’t think that there is still massive growth potential in a purely digital business. At the end of the day, people who invest their savings want to talk to someone they trust. And one more thing. A major gap in wealth management is neglecting clients with a couple of $100,000 to invest.
Why?
These sums are unattractive from a private banking perspective because they don’t yield much. But they are very important for the individuals concerned because it is often their entire savings. And if we look ahead to the next ten years, which are likely to be more difficult rather than easier, personal interaction in banking at all levels will become much more important again.
But serving this so-called affluent segment is costly.
It will therefore become even more important to find hybrid models. One thing is certain. Personal contact will be in greater demand than ever before. And some affluent clients can become millionaires.
What are the other trends in wealth management?
On the investment side, I see a trend towards venture capital. Investments in non-listed, private companies will become significantly more important because the monetary policy framework for an unrelenting increase in stock market prices, such as we have seen over the past twenty years, is no longer there. Interest rates are rising, and there is the threat of weaker growth rates, at least for the time being.
«My grandfather and father were already in banking»
Geopolitically. things are changing, and with that come many imponderables. Globalization, which has brought us enormous efficiency gains over the past two decades, has slowed. Against this backdrop, investments that are not correlated with the stock market have a bright future.
Last but not least, ESG is a megatrend, but not an easy one.
Why?
Because the sustainability criteria – environmental, social, governance (ESG) – are extremely difficult to implement in financial investments. In my opinion, this is one of the very few areas in the financial world that needs more regulatory guidance, not less. More guidance is needed so that we as an industry can implement sustainability criteria correctly and transparently.
Why did you become a banker?
It’s partly due to family. My grandfather and father were already in banking. But it also came about somewhat by chance. I was studying philosophy and living in London, where I worked as a postman after university to earn a living. My father recommended me to a job recruiter, who noticed that I was fluent in Italian, French, English, and Spanish. That was rare for an Italian. She concluded that I had a great future in banking and that’s how it all started.
What fascinates you about this job?
The interaction with clients. Nowadays, that is often difficult because everyone is so specialized. As a doctor, for example, you specialize in – let’s say – surgery and so on. Wealth management, on the other hand, is still a diverse profession where it’s an advantage to be a generalist to deal successfully with entrepreneurs or high-net-worth individuals.
«The moral compass is central to me»
Often, these are also exciting personalities with a lot of energy and enthusiasm. Last but not least, it is a highly international activity that has taken me to many places in my career.
What do you look for when you hire people?
I look at their values. The moral compass is central to me. I also look for consistency in individual CVs. Many applicants underestimate how meaningful their resume is when it comes to that. How many jobs have they had, and how have they evolved in their roles and functions? I look for people who are determined to make a difference and do their jobs consistently.
What was the best advice your parents gave you?
The importance of consistency. You can be the smartest person in the room, but in the end, it’s having a certain consistency that makes the difference.
Where and how do you find balance in your professional life?
When I’m with my wife and with our three children, ideally by, in, or on the sea.
Claudio de Sanctis heads Deutsche Bank’s international private bank and CEO of the group’s EMEA region. He joined at the end of 2018 when he was first appointed the CEO of Deutsche Bank Switzerland and, subsequently named global head of wealth management. He is a member of the group management committee. Previously, he worked in various leadership roles at Credit Suisse and UBS, in both Switzerland and Singapore. He holds a B.A. magna cum laude in philosophy from Sapienza Università di Roma.
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