- Deutsche Bank has ramped issuance of long-dated callable senior and subordinated bonds (USD/EUR), extending maturities and bolstering capital but adding call/refinancing risk.
- DB’s FX chief George Saravelos warns U.S.-Europe trade tensions could “weaponize” capital flows as Europe potentially reduces its roughly $8T in U.S. asset exposure, pressuring funding and valuations.
- Management targets improving 2025 profitability (~€32B revenue, <65% cost/income, >10% RoTE) while the stock still trades on a low multiple versus peers, keeping valuation contested.
- Private-banking hires such as Kouroche Achtari in Swiss Romande underscore a push toward higher-margin, fee-based growth to diversify from wholesale funding sensitivity.
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Deutsche Bank’s recent funding activity and strategic announcements illuminate its current investment narrative—a mixture of stabilizing funding, regulatory alignment, growth in privileged segments, and heightened macro risk.
Long-dated funding & capital structure risk: The bank has issued a wave of callable senior unsecured notes in both euro-denominated and US dollar bond formats, with maturities stretching to 2041–2051 and coupons in the 4.30–5.75% range. One definitive issuance is a 5.50% senior debt note due January 20, 2041, which is callable semi-annually beginning January 2027. These issuances serve balance-sheet housekeeping: extending liability maturities, locking in current interest rates, and securing funding predictability. However, the callable nature exposes DBK to refinancing risk if market rates rise before call dates.
Macro & capital flow risk: George Saravelos has flagged the risk of “weaponized” capital flows amid U.S. trade and tariff threats. Europe holds roughly $8 trillion in U.S. equities and bonds—twice what the rest of the world holds—which makes Europe a major counterparty if exposures are reduced. This potential retrenchment raises strategic funding risks for U.S. asset markets and a valuation shock for DBK if cross-border flows are disrupted and funding costs increase.
Valuation, profitability & investor expectations: DBK is targeting ~€32 billion in group net revenues for 2025, aiming for RoTE above 10%, cost/income below 65%, credit loss provisions easing to ~€350-400 million per quarter, and stable CET1 ratios. In Q3 2025, DBK reported €24.4 billion revenues (year-to-date), ~7% YoY growth; RoTE of 10.9%; and narrower cost/income at ~63%. Despite this, the current P/E ratio (~12.4x) remains far below many European and global banking peers; the estimated “fair P/E” is over 25x. Some analysts (and valuation models) thus argue the stock remains undervalued; others caution that expectations are priced in and may leave little margin for error.
Private banking expansion & diversification: The appointment of Kouroche Achtari to head Private Bank Swiss Romande signifies a strategic push into wealth management and UHNWI/ex-family-office segments in high-net-worth jurisdictions. In light of pressures on bank net interest margins and wholesale funding, further growth in fee income and structured lending may enhance revenue stability.
Strategic implications & open questions: Can DBK manage interest‐rate risk inherent in its callable long-dated debt before call windows? What will happen if capital flow tensions escalate and Europe materially reduces U.S. asset exposure—how will that affect DBK’s own asset/liability exposure and its U.S. dollar funding costs? Also, how realistic are margin targets if elevated credit costs persist, especially with exposure to commercial real estate in the U.S. and regulatory scrutiny on bad loans? Finally, valuation hinges on execution: beat guidance or miss, the current multiple may swing sharply.
Supporting Notes
- In mid-January 2026 Deutsche Bank issued multiple callable senior fixed-rate notes denominated in US dollars and euros—the longest dated being 5.50% senior notes due 2041.
- The green bond issuance included a €150 million unsubordinated green note due 2038.
- George Saravelos, Deutsche Bank’s global FX head, forecast that Europe may trim holdings of ~$8 trillion in U.S. bonds and equities in response to trade threats; he described such moves as “weaponization of capital” potentially more disruptive than trade flows.
- Deutsche Bank’s outlook for 2025: net revenues higher (around €32 billion), cost/income ratio reset to below 65%, non-interest expenses flat or falling, credit loss provisions projected €350-400 million per quarter, RoTE above 10%.
- Q3 2025 results: first nine months revenues of €24.4 billion (YoY +7%), RoTE of ~10.9%, cost/income ratio ~63%.
- Valuation metrics: current P/E ~12.4-12.5×; estimated fair P/E ~25.3×, suggesting shares may be undervalued under growth scenarios.
- Private banking leadership is being bolstered as Kouroche Achtari becomes Head of Private Bank Swiss Romande, overseeing UHNWI and family office segments in French-speaking Switzerland.
- Credit risk and bad loans remain an issue—DBK set aside €1.8 billion in provisions for 2024, or ~38 basis points of average loans, against dealers’ expectations, reflecting elevated but stabilizing headwinds from sectors like U.S. commercial real estate.