The managerial contradictions of extroverted financialization: the rise and fall of Deutsche Bank

Abstract

Deutsche Bank was once an acclaimed US-style investment bank but is now struggling. The rise of US finance is often explained as an outcome of financial liberalization that motivated other banks to abandon their traditional industrial support to chase profit opportunities within global securities markets. This story, however, underestimates how the transition to US-led financialization was deeply entangled with managerial struggles and the contradictions of adopting US financial innovations from a peripheral position. By contrast, I use the concept of extroverted financialization to portray Deutsche Bank’s transformation as an outcome of its attempts to integrate new funding practices connected to US money markets, called liability management. I argue that this process generated a difficult-to-manage business model and, ultimately, Deutsche’s decline. Because of these extroverted strategies, the bank is now caught between opposing logics of banking, within neither of which it can regain its previous powerful position.

Indebted societies credit and welfare in rich democracies. By AndreasWiedemann, Cambridge University Press

“…Market-based banking is not the only or even dominant form of banking across all Europe. Germany had one global market-based bank, Deutsche Bank, but it is now fell down (Beck, 2022). However, other large European countries like Spain, Italy, the Netherlands and France have developed large market-based banks.…”