Deutsche Bank eyes transaction banking boost from Asia

By Andreas Kröner and Arno Schuetze

FRANKFURT (Reuters) - Deutsche Bank expects to see strong growth in Asia for its global payments and trade financing business in the coming years, despite recent signs of emerging market cooling, the head of its Global Transaction Banking unit said.

"Within the transaction bank, the share of revenue coming from Asia could rise to a quarter in the coming years from 18 percent now," Werner Steinmueller told Reuters in an interview.

Global Transaction Banking (GTB) already contributes about a third of Deutsche Bank's earnings in the Asia-Pacific region and Steinmueller said he expects the integration of GTB with corporate finance activities as part of a group revamp under Chief Executive John Cryan will create improved cross-selling opportunities.

"We can certainly achieve more in sales when the corporate finance side also positions transaction banking products," he said.

GTB has been a bright patch amid the gloom at Germany's biggest lender, which reported a record net loss of nearly 7 billion euros ($7.8 bln) last year.

The transaction bank, which provides corporate and financial customers with services such as cross-border payments, risk reduction for international trade, custody or clearing, saw pretax profit rise by a quarter to 1.4 billion euros last year, with revenue up 12 percent to 4.6 billion euros.

GTB is aiming for growth of 3-5 percent in the coming years, Steinmueller said, though weak economic growth in Asia and Latin America will weigh on development this year.

Cryan has described GTB as the "backbone" of Deutsche Bank and has pledged to invest 1 billion euros in improving its systems, in contrast to savings and cutbacks elsewhere.

"For the transaction bank, which is so dependent on processes and technology, that is enormously important," Steinmueller said.

The unit has also been working to improve its anti-money laundering systems, an area facing increased scrutiny by international regulators.

Steinmueller, 62, said GTB has been doing 'spring cleaning' of some clients where transaction volumes are low, asking them if they might prefer working with a different bank.

"On top of that, we are taking a much closer look at customers in risky regions, also because of regulators' stricter demands. We have become more cautious," Steinmueller said.

The note of caution also applies to doing business with Iran, despite the lifting of some international sanctions earlier this year. Deutsche Bank paid nearly $260 million last year to settle charges in the United States that it did business with entities in U.S.-sanctioned countries, including Iran.

"We remain extremely reserved when it comes to Iran," Steinmueller said.

(Writing by Jonathan Gould; Editing by Tina Bellon and Susan Fenton)

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