John Cryan, the British-born chief executive of Deutsche Bank, has a refreshing habit of speaking plainly.
Five months into the job, in November 2015, he told an industry conference that bankers were paid too much and that he couldn’t understand why they needed to be paid bonuses.
He said: “I sit on trading floors and wonder what drives people. I don’t fully empathise with anyone who says they turn up to work and work harder because they can be paid a little bit more, but that may be a personal view. I’ve never been able to understand the way additional excess riches drive people to behave differently.
“I have no idea why I was offered a contract with a bonus in it, because I promise you, I will not work any harder or any less hard in any year, in any day, just because someone is going to pay me more or less.”
Mr Cryan was as good as his word. Deutsche’s entire executive board, including him, received no bonuses that year after Mr Cryan insisted they had to “own” the bank’s €7bn loss for 2015.
He also took the axe to the bank’s general bonus pool, insisting it was “a matter of justice”, with the austerity continuing into the following year.
Two years on, Mr Cryan has today been speaking at the same industry conference, again offering dollops of common sense.
His argument this time around is that there needs to be more consolidation among Europe’s banks. The logic behind this is that there needs to be a “handful of institutions” capable of competing on a global playing field against the likes of the big American banks and, increasingly, rivals from Asia.
He added: “I would never rule it [consolidation] out. There are too many institutions in Europe, especially in [Germany], China and the United States that have very large banks which have the heft to invest globally and which can withstand relatively long periods of low returns.”
The numbers bear him out. Of America’s large banks, JP Morgan Chase has a stock market value of $342bn (£259bn); Bank of America is valued at $279bn (£212bn), Wells Fargo at $269bn (£204bn); Citigroup at $190bn (£144bn) and Morgan Stanley at $88bn (£67bn).
Among the big Chinese players, Industrial & Commercial Bank of China is valued at $313bn (£237bn); China Construction Bank at $235bn (£178bn); Bank of China at $207bn (£157bn) and Agricultural Bank of China at $137bn (£104bn).
Compare that with the large European players. Britain’s largest bank, HSBC, is valued at $193bn (£146bn), making it one of the few European players to come close to the US and Chinese giants. France’s largest bank, BNP Paribas, is valued at $94bn (£71bn). Spain’s biggest player, Banco Santander, is valued at $105bn (£80bn) and Deutsche Bank itself weighs in at a mere $40bn (£30bn).
So Mr Cryan does appear to be onto something. He argues that the comparatively small size of Europe’s banks means they have to be “super-efficient” in a low-growth and ultra-low interest rate environment. Bank profits suffer in such conditions as low interest rates squeeze the net interest margin – the spread between the rate they charge borrowers and the rate they pay depositors.
However, he does not actually appear to be committing to mergers himself, arguing the integration process “takes the management’s eye off the ball”.
He might have pointed out, at this point, the destruction wrought on Royal Bank of Scotland and the Franco-Belgian bank Fortis when they bought Dutch lender ABN Amro. Only Banco Santander, the third participant in the deal, emerged relatively unscathed.
Yet it is a fact that nearly all the big US banks have got bigger not through the kind of organic growth that Mr Cryan prefers but through takeovers.
JP Morgan Chase, for example, swallowed Bear Stearns and Washington Mutual during the crisis years while Wells consumed Wachovia, itself one of the most acquisitive banks of the early 2000s.
Bank of America, meanwhile, has guzzled a whole clutch of competitors since the start of the century, including MBNA, LaSalle Bank and Merrill Lynch – while, with US banks now throwing off vast amounts of cash, the expectation is that another wave of takeovers may well get under way. These are likely to involve smaller players bulking up, including Citizens (previously owned by RBS), BB&T and Fifth Third Bancorp.
A similar wave of acquisitions in Europe feels unlikely, certainly in Britain, where the ABN Amro takeover by RBS and the takeover of HBOS by Lloyds Banking Group have left sour memories. Consolidation in mainland Europe, where there are swathes of very small banks, seems more likely.
Yet Mr Cryan also has his eyes on competitors other than the American and Chinese banks.
He said: “Probably the most interesting thing, and on which we spend most time, is can we be competitive against companies that are not banks? Can we for example be competitive in payments versus companies that purport to make payments but are not regulated in the art of making payments? Can we be competitive against para-banks or credit institutions that are not regulated?
“Can we ultimately be competitive in taking deposits which is the core reason why banks are regulated, against the likes of Starbucks, which takes a huge volume of deposits, it just doesn’t look as if they’re taking deposits because they’re taking pre-payments.
“So can we be competitive against technology companies in what is a world that is becoming more and more based on smart technology? So when I think of competitiveness, I don’t just think about competitiveness in the current interest rate environment, it’s a much broader definition and it’s compared with sectors other than the banking sector.”
It is a theme we are likely to hear a lot more of in coming years.