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Karen Weaver

The Value
of Research

Editors’ Note

A chartered financial analyst, New York-based Karen Weaver joined Deutsche Bank in 2000, after working for Credit Suisse First Boston. Also a former portfolio manager active in the ABS and MBS markets, Weaver studied statistics and economics as an undergraduate, and finance at the graduate level, at Temple University.

Company Brief

Headquartered in Frankfurt, Deutsche Bank (www.db.com) is a leading global investment bank with a strong and profitable private clients franchise. A leader in Germany and Europe, the bank is continuously growing in North America, Asia, and key emerging markets. With 77,920 employees in 75 countries, Deutsche Bank offers unparalleled financial services throughout the world. The bank competes to be the leading global provider of financial solutions for demanding clients while creating exceptional value for its shareholders and people.

Over the next two or three years, what major changes will impact Deutsche Bank’s research business?

Honestly, I think the major change is that we’re in for a rough patch. This past year has been pretty challenging, with volatile markets for most sectors, and I think we’re going to see more of that. Frankly, such times are good for research, because when everything is going well, there is less demand for us. During difficult times, the value of research is reestablished and it moves front and center. That’s not to say we enjoy difficult markets, but it certainly makes us more popular.

You run a regional research group for the Americas, with 300 people doing research across equities, fixed income, economics, etc. But you also have a small, focused securitization group that you run globally. How do those two mesh?

There are really two lines along which research is run, and the stronger line is by sector, if you will – equity versus fixed income and so on. But there’s also a regional component. We excel in bringing both things to bear. We have also been successful in encouraging cooperation between sectors. For example, our economists are concerned about the mortgage and housing crises’ impact on the economy. On the equity side, our home building analysts and bank analysts are concerned about it. On the fixed income side, there are concerns about it as well. So we try to really find the most efficient way to leverage relationships, both regionally and within sectors.

How do you differentiate Deutsche Bank’s research offerings from those offered by your competitors? Do your research capabilities serve as a competitive advantage for the bank?

In securitization, certainly we have been able to differentiate ourselves, because we had the benefit of making an early call on the housing market and mortgage credit – a call that was controversial at the time that we made it. I think we did a very good job of maximizing the value of that call by getting the word out, not just to clients, but also internally, to all of the segments of our business that could be impacted by the housing market or mortgage credit. So we have certainly differentiated ourselves in the past couple of years. As a broader point, we really try to be a researcher’s research people. For example, one of the reasons we got it right, ahead of the others, on mortgage credit is that we were really out there, meeting with the people who underwrite mortgages – the people sitting with files on their desks. That level of granularity alerted us to things well ahead of others. So we really try not to just sit at our desks and move papers around, but to get out there and to do things that help us develop unique insights.

What is your outlook for securitization research in international markets, especially in emerging ones?

The use of securitization hadn’t really proliferated internationally until recently, in part because it requires a certain legal framework that doesn’t or didn’t exist in many emerging markets. But as we look around the globe, many countries, led by the interest in having a mortgage credit market, have decided that it benefits their economy to have securitization, so they created a legal framework that allows for it. With that legal framework in place, we are increasingly using these tools around the globe. We’re seeing mortgage securitization in Turkey, Russia, and India. Outside of Japan, which is pretty well-established, Asia is also an area of growth. We’re also doing a lot more in Latin America. We’ve done a lot in Mexico, for example. So it’s a tool that all developed markets seek to have, and we have certainly seen it proliferate.

Does Wall Street research attract women professionals? Is it difficult to create work/life balance in this business?

We’ve certainly renewed our efforts in bringing women into the business, and we’ve had a longstanding involvement in a lot of well-known programs, such as Women on Wall Street – we’ve been a long-time sponsor of that program. We’re renewing and doubling our efforts to continue to keep up that stream of women coming into the firm in order to develop, and retain, our talent pool. To be blunt, work/life balance is difficult for anyone who chooses to work on Wall Street, but I think Deutsche Bank does a better job of helping our women and men deal with that. I don’t think we can expect this industry to provide an ideal work/life balance for everyone, but we can certainly make improvements, and we have. For example, just last year, we made a big boost to our maternity benefits, upping the paid leave from 12 weeks to 16 weeks, plus another eight-week transition period on a reduced schedule.

How challenging is it for you to achieve that work/life balance personally? Are you ever able to turn off the business?

Of course it’s a challenge, but I have to confess: I rarely want to turn off the business. You don’t go into this business if you want to be home at six o’clock for dinner. You go into this business if it excites you and turns you on. I can’t stop talking about my area of expertise. So you have to really be into it, love it, and enjoy it, and then you don’t want to turn it off.