Online retailer Zalando is just the kind of fast-growing German business with foreign expansion plans that Deutsche Bank chief executive Christian Sewing needs to help drive the struggling lender's recovery.
In an attempt to draw a line under years of scandals and heavy losses, Sewing is pulling back from investment banking and rebuilding Deutsche Bank's corporate division by deepening existing relationships and attracting clients beyond its traditional blue-chip customers.
But when Deutsche has tried to expand its business with Zalando by offering to hold more of its cash for free, rather than charging a fee, Zalando has declined.
The company, whose revenue has grown to 5 billion euros ($5.6 billion) in the 11 years since it was founded, wants to continue to spread its risk by leaving its cash with a wide range of institutions, sometimes for a fee.
"Deutsche Bank is a systemically relevant bank but, nevertheless, we see a possible risk and are trying to the best of our knowledge to mitigate the risk and to have a good sleep at night," Dominika Kilka-Roth, who heads Zalando's risk management, told Reuters.
She added that Deutsche remains one of Zalando's "main banks" and that the relationship was good.
Yet Zalando's stance indicates it could be a tough slog for Sewing, who wants corporate banking to be the soul of Deutsche Bank, just as it was when the lender was founded in 1870 a year before German unification.
Since Deutsche Bank embarked 20 years ago on its ultimately failed but costly drive to become a Wall Street trading powerhouse, a lot has changed in its domestic market.
A growing number of domestic and foreign banks muscled in on its business while it was distracted by its global investment banking ambitions, leaving a far more crowded German market now.
German lenders Commerzbank and HVB, a subsidiary of Italy's UniCredit, have been pursuing German corporate clients both large and small for some time and are bringing in more senior bankers to accelerate their push.
At the same time, foreign banks, including US giants JPMorgan, Goldman Sachs and Morgan Stanley , have been making inroads while Standard Chartered recently set up shop across the street from Deutsche with a view to targeting German companies.
What's more, ever since the financial crisis, German companies are more likely to use multiple lenders, making it harder for Deutsche to re-establish itself as a so-called Hausbank for German corporates.
Deutsche's push also comes as Germany, which is Europe's biggest economy, risks sliding into recession for the first time since 2013 after years of punishingly low interest rates.
On Friday, shares in Deutsche Bank hit a record low below 6 euros. In 2007, before the global financial crisis took hold, the shares peaked at above 90 euros.
'LOST OUR COMPASS'
Earlier this year, the German government pushed for Deutsche to merge with cross-town rival Commerzbank to stabilise the lender. But the talks failed, leading Deutsche to announce its major revamp and corporate push last month.
Sewing recognises Deutsche has lost ground but is determined to press on with his strategy to make the bank the go-to institution for company treasurers and to help more German companies become global powerhouses.
"This is the business Deutsche Bank was founded for, however, we have to admit that we lost our compass in the last two decades," Sewing said in July. "Now we will make the business stronger than ever before."
Deutsche plans to merge its corporate banking businesses across various divisions into one large unit, and target mid-sized German firms, known as the Mittelstand, as well as blue-chips.
Michael Schleef, Deutsche's head of corporate banking in Germany, told Reuters there had been a 58% increase in incoming orders since Oct. 1, though he declined to give details. Calls and visits to clients were up 50% per banker after years of stagnation and the feedback was "very positive", he said.
Deutsche is also planning to expand in new markets in eastern Europe and Southeast Asia, he said. "We aren't feeling any uncertainty from clients."
Mittelstand companies are the backbone of the German economy but have long felt neglected by Deutsche, turning to smaller rivals instead. Mario Ohoven, president of a federal association of Mittelstand companies, said a lot will depend on whether Deutsche approaches them as a partner, or an arrogant banker.
A big problem for Deutsche as it embarks on the new strategy is that it has been slipping down the German league tables.
So far this year, Deutsche has been absent from several major deals involving German firms. When chipmaker Infineon Technologies bought America's Cypress Semiconductor for $10 billion - the biggest overseas deal by a German company in 2019 - it was advised by Credit Suisse, Bank of America and JPMorgan.
In the ranking for fees from mergers and takeovers involving German companies this year, Deutsche has slipped to sixth place, according to data from Dealogic. Deutsche had ranked among the top five banks since at least 2000, often in top spot.
Deutsche has slipped down the table for syndicated loans for German companies too, according to Dealogic. It still ranks first for their bond issues but its market share has plunged by two-thirds since 2000, the data shows.
Deutsche also dropped to sixth place from fifth in league tables for transaction banking between 2016 and 2018, according to Coalition, which analyses the banking industry.
And in a sign companies are spreading their business around more, 22 out of 27 German companies active in deals awarded a smaller share of fees to their primary bank over the past five years than in the previous five years, according to a Reuters analysis of Refinitiv data.
The intensified competition at home is epitomised by the case of Duerr, a 120-year-old company that makes factory equipment for the auto industry.
In 2014, Duerr counted Deutsche among its seven main banks for a syndicated loan. In a new agreement this month, Deutsche is now one of 13, a wider circle that includes Bank of China , Dutch bank ING, and JPMorgan.
"Nobody puts all eggs in one basket," said Christian Aue, a vice president for corporate finance and treasury at Duerr.
Andreas Thomae of fund manager Deka, which is a large investor in Deutsche, said: "It is now extremely important for the bank that corporate customers accept the new strategy."
"It will be interesting to see whether it can increase earnings in the division as planned. This will be a long journey," he said.
As Zalando turned down Deutsche's offer, its bankers tried to assuage the company's misgivings, Kilka-Roth said, but to no avail.
Deutsche Bank declined to comment on Zalando.
The bank's own data suggests Zalando is not the only corporate with doubts. Companies started reducing cash stored with Deutsche several years ago as the bank's woes mounted, according to data from the bank's annual report.
Company deposits, which primarily come from Deutsche's transaction business, fell 8% between 2015 and 2018.
Narrower measures of short-term deposits from big customers - excluding deposits from banks and companies doing transaction banking such as cross-border payments - show an even steeper fall. Deposits with a maturity of less than a year, for example, fell 32% between 2015 and 2018.
Deutsche Bank disputed any suggestion the decline in deposits was related to customer concerns about the bank.
Instead, the drop is the result of an effort by Deutsche to convert deposits from large corporations into alternative investments to avoid negative interest rates charged by the European Central Bank, a Deutsche Bank spokesman said.
Deposits from smaller corporate clients have risen by double digits over the past three years, he said.
Regulators say the bank is on firmer footing than in 2016 when they feared it was on the brink of collapse after it became public it would have to pay a multi-billion dollar fine for its role in the U.S. mortgage crisis.
Then, some of Germany's top industrial companies discussed taking a symbolic stake in Deutsche Bank to help it through its turmoil. But no action was taken.
Sewing, who became CEO last year, would now like to welcome anchor investors from corporate Germany, according to someone who has spoken with him. Deutsche declined to comment.
It is unclear how widespread Zalando's stance is in Germany because few firms speak publicly about banking relationships.
RWE's finance chief Markus Krebber, for example, told Reuters the German energy company had "complete confidence in the strength and performance of Deutsche Bank and see it on the right path under its initiated restructuring".
Deutsche's corporate banking business already accounts for 5 billion euros in annual revenue, according to the bank's calculations. Sewing said it should be able to increase that to 6 billion euros by 2022, "not by doing rocket science, but by simply reaping low hanging fruit".
He pointed to the fact the bank already had relationships with all 30 companies in Germany's main DAX stock market index .
"In the first half of 2019 alone, we facilitated payments worth more than 100 trillion euros," Sewing said in July.
A recent survey from the consultancy Bain & Company, however, found revenues and profitability in the corporate banking sector are the lowest in Germany since the financial crisis due to increased competition.
"When we talk to our clients, they have very aggressive plans in the corporate banking space this year," said Christian Graf, the report's author and consultant to the banking industry. ($1 = 0.8924 euros)