Deutsche Bank (
) is a leading global investment bank headquartered in Frankfurt,
Germany. The bank offers financial products and services for
corporates, government, financial institutions, private and
business clients globally. It competes with other global investment
banks like Credit Suisse (
), UBS (
), JP Morgan (
), Morgan Stanley (
) and Goldman Sachs (GS).
Global Transaction Banking is the most important driver of the
bank's value by our estimates. We estimate that Global Transaction
Banking constitutes around 36% of
our $54.80 price estimate for Deutsche Bank's
Global Transaction Banking (GTB) delivers commercial banking
products and services for corporate clients and financial
institutions, including domestic and cross-border payments,
professional risk mitigation and financing for international trade
as well as the provision of trust, agency, depositary, custody and
Deutsche Bank earns fees for providing transaction services to
its corporate clients and other financial institutions.
Global Transaction Fees represents the fees earned by Deutsche Bank
net of interest expenses, expressed as a percentage of total
financial assets in the Global Transaction Banking division.
Global Transaction Fees declined from 11% in 2005 to around 6%
in 2009 driven by a rapidly increasing asset base in contrast to a
low interest rate environment, depressed asset valuation in the
midst of global financial crisis, lower depository receipts and
customer activity.We forecast Global Transaction Fees to increase
modestly in 2010 in line with guidance and remain constant in the
We expect increased global penetration and improved product
capabilities will drive growth. Deutsche Bank acquired parts of ABN
AMRO corporate and commercial banking activities in the Netherlands
and the third party agency securities lending business of Dresdner
Bank AG from Commerzbank AG. Also, Deutsche Bank has been
continuously investing its resources in technologies that will
improve the way payments are processed. Such platforms include the
Single Euro Payment Areas (SEPA) and FX4Cash which provides cross
currency payment solutions.
With Global Transaction Banking benefiting from strong fee
growth in Trust & Securities Services, primarily in the custody
business, and also in Trade Finance, where it is capitalizing on
the continued demand for international trade products and
financing, there can be an upside to our current forecasts.
If the Global Transaction Fees increases to around 12% by the
end of our forecast period, it would mean around 5% upside to our
current price estimate for Deutsche Bank's stock.
See our full estimate for Deutsche Bank