Chapter 6 delves into the heart of Deutsche Bank’s transformation towards a US investment bank. It situates the changes of Deutsche’s business model within its play of catch with US banks: To compete in Eurodollar markets, German banks had to find a way to institutionalise their connections to US money markets to improve their access to USD. The attempts to adopt liability management (LM) drove Deutsche’s partial uprooting from its home market to relocate to the US. This challenges the dominant narrative of a US imposition, instead recognising that the trajectory of change was driven by Deutsche’s strategies of extroversion. Tracing the specific practices of Deutsche’s foreign acquisitions and strategies on US money markets, this chapter reveals that Deutsche had to progressively change its traditional practices to accommodate the imperatives of LM. This transformation went from a change in funding strategies to acquire more USD to the corresponding adaptations on Deutsche’s asset side – from corporate loans to US residential mortgage-backed – or ‘toxic’ – securities. This chapter thus presents Deutsche’s move away from the centre of Germany Inc. towards a US investment bank as an outcome of the imperatives of extroverted financialisation.

Chapter 3 starts the recalibration of financialisation by telling an alternative history of German finance. It zooms in on the struggles over deposits to provide the historical and institutional backdrop to appreciate the key differences and overlaps in US and German financial markets, and to understand those financial developments that set them apart from the 1960s onwards. This chapter examines the development of the Pfandbrief (covered bond) from the eighteenth century onwards to establish that market-based funding practices have a long history in Germany. After the devastation of the Seven Years’ War (1756–1763), banks and the state (the Prussian prince and its gentry) together sought new ways to boost lending and borrowing with the help of financial securities and collateral. This chapter shows that German housing finance was historically much more market-based than in the US. While the Pfandbrief has been a key financial security promoting long-term lending, it was used predominantly by specialised mortgage and public savings banks. Universal banks only entered the fray in the 1970s when their corporate deposits declined. Chapter 3 shows that German banking was geared towards market-based finance but different to the one that emerged as part of US-led financialisation.