In March last year, this column asked the question: ‘Is Deutsche serious?’ The Germans were preparing to take over Bankers Trust, and the prospects for the global custody business were unclear, despite protestations by senior managers that they would remain absolutely committed to the business. Have they kept their promise?
The short answer is ‘Yes’. The last 12 months have been little short of cathartic for Deutsche’s securities services business, as a steady procession of top staff have left the company, either voluntarily or not. The first to go, following the June 1999 creation of the Global Institutional Services division (GIS) under Mary Cirillo’s leadership, were Francis Jackson, a highly successful salesman in London, and Steve Soltis, who was running the investor services business from New York. In September, they were followed by Roger Booth, who was the global head of custody services.
By February of this year, Mary Cirillo had decided to quit ‘by amicable mutual consent’. A month later Tim Keaney, Dick Feehan and Scott Dickinson – the spine of the old Bankers Trust custody sales team – were also on their way, as was Tim Boomer, who had taken over from Steve Soltis.
But February also marked the beginning of a significant renaissance. Deutsche Bank bought InterSec, the global performance measurement and consulting firm, to complement the WM business. Almost immediately, it announced plans for a major new development in Edinburgh, where WM and the European custody operations centre are based. It also started to look increasingly likely that Juergen Marziniak would finally take the bait and return to run the business he had quit in 1998 to join Cedel (now Clearstream).
In March, Marziniak’s appointment as head of Global Securities Services (GSS) was confirmed, with the further announcement that Jim Zeigon, a former head of Chase’s Global Services business, would come in as Marziniak’s boss to replace Mary Cirillo as head of GIS. These appointments signalled the determination of Hermann-Josef Lamberti, the board member responsible for GIS, to resolve the political issues that had been festering since the takeover of BT.
Marziniak, too, was keen to impose his authority immediately. Less than a month after his arrival, he introduced sweeping changes to the GSS organisational structure, appointing a chief operating officer for each of three regions – the US, Asia and Europe. Reporting directly to Marziniak, the three COOs have regional responsibility for customer management, operations and IT. Ken Kennedy was made COO for the US, whilst Roger Harrold became COO for Asia.
Most significantly, Marziniak appointed Terry McCaughey as COO for Europe. McCaughey had been Marziniak’s number two and director of global sales and customer services at Clearstream Banking, having quit as head of HSBC’s Global Investor Services business last September after seven years in the job.
The purge may not yet be complete, but the skeleton of the senior management team is now in place, and it looks considerably more impressive than the original line-up. In Europe – by far the most important region for Deutsche – McCaughey will bring to bear all his substantial experience, as well as a strategic vision that many believe has been lacking for the last eighteen months.
Deutsche’s proposition is looking increasingly attractive. Its core custody service is beginning to improve, as evidenced by industry surveys. In this year’s R&M Consultants survey, it ranked sixth overall for client satisfaction, ahead of such heavy hitters as State Street and The Bank of New York. It subsequently confirmed this rating in the Global Investor survey.
As a provider of value-added services, it is also looking substantially more competitive. With WM and InterSec, for instance, it now has a global investment analytics capability that few other custodians can match, whilst its securities lending business is one of the more successful and innovative, especially for third-party programmes.
The commitment to the business is undoubtedly there. But which business? This is the main outstanding issue that Lamberti, Zeigon and Marziniak have to address. Does Deutsche Bank want to continue as a custodian to US institutions, especially when some of the clients it inherited from BT have turned out to be problematic and unprofitable? Does it want or need to run the world’s second largest proprietary network of sub-custody operations? Should it get into the broker/dealer clearing and settlement business? The strategic decisions that Deutsche makes for its securities services business will be critical to its success over the next five years. But there should no longer be any doubt that it is in the market for the long run.

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