The appointment of Lee Zhang to head the Greater China team signifies a big coup for Deutsche, which has been aggressively building its investment banking operations and a blow for Goldman, where Zhang was regarded as second only to Ziwang Xu, the US investment bank's most senior rainmaker on the Mainland.

Zhang's calling card is said to be an extensive network of middle management contacts across corporate China. In particular, he is a well-known figure at the heart of what is known as the "tea party circle", the Chinese equivalent of the old boy's club. Where, for example, Xu has always been Goldman's direct link to senior officials, Zhang was the relationship manager who saw transactions through to completion and dealt with the detail.

Officials say that this is why he makes a perfect fit for Deutsche. As Crotty explains: "Zhang has always been at the sharp end of what's going on in China. He has been involved in every big IPO and is completely plugged in. We weren't looking for a senior rainmaker, but someone who could get into the information flow at a very early stage when deals are only first coming together." 

He concedes that the bank has some ground to make up. "Deal flow from China over the past few years has been pretty substantial, but we found we weren't getting senior positions," he acknowledges. "We've missed the first wave of deals and we don't want to miss the second."

Some might argue that Deutsche has missed the boat, particularly since the primary market for Chinese equity offerings has waned since November last year when China Mobile's $6.6 billion share placement immediately headed south in secondary trading. "It's important to take a long-term view," Crotty replies. "We've been hearing all the reports about the market being a bit jaded from the amount of paper coming from China. But these things always ebb and flow. 

"One thing is for certain," he adds. "The Chinese government has made it quite clear it intends to implement change and impose discipline on its state-owned enterprises (SOE's) by using the international capital markets."

Deutsche's China investment banking origination team currently numbers five, out of a total investment banking division of just over 100 (excluding debt capital markets which falls under global markets). Crotty believes the bank has now built a solid platform, which can either challenge its slightly more populous US rivals, or equally weather any drop-off in business.

The bank has implemented an aggressive expansion plan in Europe, where it has zoomed up to the top of the league tables and is keen to mirror its success in Asia. According to figures supplied by Capital Data Equityware, Deutsche did not even make the league tables for European equity issues in 1997. It made its first entry at number nine in 1998, moving up one slot to number eight in 1999 and finally to the second slot behind Goldman Sachs during 2000.

"Generally, there was a feeling that the investment banking platform in Asia wasn't fully pulling its weight and it's taken about six to 12 months to implement the correct strategy," Crotty comments. "We've undergone a controlled build-up over the past 18 months and increased our ECM team from two in mid-1999 to just over 15 currently.

“Most recently, we've brought out Chris Laing to cover the convertibles market and Charles Whitfield from London, who's a structured equity specialist. We've now pretty much got to the point where we'd like to be on the equity side."

On the M&A front, Crotty concludes that the bank has not quite finished its hiring spree yet. “It was a conscious decision to build M&A more slowly,” he says. “We saw that the fee flow was coming from equity and only started to add to the M&A side late last year. We bought Anthony Steains on board (editors note: see accompanying Q&A) and are in the process of putting few more people in place.”

Zhang, meanwhile, will start work at Deutsche in March. Prior to his three years at Goldman, he formerly ran corporate finance for Schroders China.