Deutsche Bank

Deutsche Bank & Investment Banking for Beginners Serena Zuidema

28 September 2011

All prices are those current at the end of the previous trading session unless otherwise indicated. Prices are sourced from local exchanges via Reuters, Bloomberg and other vendors. Data is sourced from Deutsche Bank and subject companies. Deutsche Bank does and seeks to do business with companies covered in its research reports. Thus, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. DISCLOSURES AND ANALYST CERTIFICATIONS ARE LOCATED IN APPENDIX 1. MICA(P) 146/04/2011

What does an investment bank do?

What does an investment bank do? An investment bank raises money by issuing securities for companies and making markets in different asset classes An investment bank provides advice to corporations about mergers and acquisitions Within an investment bank, investment managers manage money for individuals and institutions.

Retail bank: Deals directly with consumers. They handle savings and checking accounts, mortgages, and personal loans.

Commercial bank: Takes deposits and gives loans, mostly to corporations. There used to be a rule that retail and commercial banking activity had to be separated from investment banking. This no longer applies today.

Central bank: - Maintains the stability of its national economy by raising / reducing interest rates - Is the supervisor of all other types of banks - Last resort lender to failing financial institutions.

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Deutsche Banks (simplified) divisional structure

Corporate and Investment Bank (CIB)
Global Transaction Banking
Cash Management Trade Finance Capital Market Sales Trust & Security Services

Corporate Finance
Mergers & Acquisitions Equity Capital Markets Asset Finance & Leasing Commercial Real Estate Debt Finance UK Corporate Broking

Global Markets
Type of desks Sales & Trading Structuring Research Type of products Equities Debt FX, Rates Commodities Derivatives

Asset Management
Retail Institutional Insurance Alternatives

Private Wealth Management

Serving high net worth individuals, families, and select institutions worldwide

Support Functions:

Technology

Risk

Finance

Human Resources

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How the financial world sees itself

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How does an investment bank make money?

Global Markets
Banks act as market makers: They aim to generate revenues by buying financial products at a lower price than the price at which they sell it. Bid-ask spreads: The difference between the buying price (bid) and the selling price (offer). Example:
Client 1 wants to sell a bond Bank buys the bond from client 1 and sells the bond to client 2 Client 2 wants to buy the same bond as client 1

In Sales & Research, people receive commissions for offering services to clients.

Corporate finance
By providing advise to companies, investment bankers generate revenues by receiving fees (most of the times a fixed % of the deal).

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Current challenges faced in the industry

1) Responding to the regulatory tsunami
Banks have high systemic risks: If one defaults, others might default as well(see Lehman Brothers). After the crisis, in December 2009, Basel Committee proposed a new set of rules, often refered to as Basel III. The direction of these proposals is to sharply reduce risk and complexity in the system. Basel III will require banks to hold 4.5% of common equity (up from 2% in Basel II) and 6% of Tier I capital (up from 4% in Basel II) of risk-weighted assets (RWA). Tier 1 ratio: The ratio of a banks core equity capital to its total risk-weighted assets. Risk-weighted assets: Total of all assets held by the bank weighted by credit risk

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Current challenges faced in the industry

2) Maximising client profitability
Restrictions on proprietary trading: Dodd-Frank act: Risky proprietary trading is prohibited Reduced exposure to complex structured products

3) New Technologies
Increasing adoption of electronic trading platforms Algorithmic trading: The use of computer programmes for entering trading orders. Widely used by pension funds, mutual funds and other buy-side traders An important role remains for traders as electronic trading systems are not (yet) able to replicate all the functions of a floor-based system and human intermediaries.

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Why should you choose to work for an investment bank?

Fast-pace environment Many different roles within the bank Working with people from all around the world It is a complex, fascinating and rewarding industry You can never predict what the day is going to bring Why should you join Deutsche Bank as a graduate or intern my own experience The graduate rotation programme offers an unique opportunity to get to know different departments within the bank Deutsche Bank offers one of the best training programmes for graduates within the financial industry As a graduate you will get a lot of support from more senior people in the bank From day 1, you will meet colleagues from all around the world and expand your network very quickly You can choose your own rotations, Deutsche Bank always takes your preferences into account!

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Quiz
Right Wrong

Myth 1: As a graduate youre only making Powerpoint presentations

Answer: This is definitely not true! During your first year you will learn the most on the job and from Day 1 youll get responsibilities

Myth 2: Youve got to be a mathematical genius to get a job in banking

Answer: Within Deutsche Bank we have people with many different academic backgrounds

Myth 3: If you want to work in banking, you need to give up your personal life
Answer: Although working hours are long, you will definitely have time to enjoy your personal life as well. Working hours vary between departments / desks

Myth 4: There is no point in applying for a job during an economic downturn

Answer: Deutsche Bank is always looking for summer interns and graduates!

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Recommended Reads & Helpful websites

To Read Liars Poker & The Big Short, Michael Lewis Barbarians at the Gate, Bryan Burrough & John Helyar City Boy, Geraint Anderson Monkey Business, John Rolfe Rogue Trader, Nick Leeson When Genius Failed, Roger Lowenstein Too Big To Fail, Andrew Ross Sorkin Websites To practice numerical / verbal tests: http://www.efinancialcareers.co.uk/numerical_test.htm www.shl.com Websites related to I-Banking: www.hereisthecity.com www.dealbreaker.com Website to remember: www.db.com/careers
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And now its time for Questions?

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