“I started in 1994 as a fund accountant with what was called Indosuez back then--which is now Caceis--and then went in client-facing roles there,” David Claus, CEO of European Depositary Bank explained at the beginning of our interview. Claus, who is Belgian, was discussing how he began his career in Luxembourg. “Subsequently, what was my largest client in my client-facing role offered me a job in asset management. So I thought, ‘Oh, this interesting, I’m moving up the value chain! Great.’”
“I was then in what you would now call a manco,” he continued. “It wasn’t even called a manco back then; this was ’98. The ‘mancos’ only came in with Ucits III. So it wasn’t a manco, but we had an entity that was kind of overseeing distribution, it was overseeing fund admin. It wasn’t all that involved in portfolio management, so it was maybe not a complete manco.”
“What they wanted to build was a third-party distribution network,” said Claus. “So my job was to build that third-party distribution, which was good fun.” He then returned to asset servicing, working for what is today Bank of New York Mellon. Claus spent more than 21 years at the firm, initially in client-facing roles, then in business and legal entity management roles, and returned to Luxembourg in 2014 to run BNY Mellon in the grand duchy.
Claus joined EDB “as an employee” in April 2022, joined the board in May and officially took over the CEO role in June. “That was kind of nice, because this added some overlap with my predecessor [Rüdiger Tepke], who still works in the Apex Group,” he added. “It was kind of a friendly handover, so to speak, which is always better than just landing there and saying, ‘Where am I? What am I doing?’”
“A bank in a non-banking group”
“What I like about this environment here is that it is very different,” said Claus, comparing EDB to his previous companies. It’s a point that other recent joiners--namely Robert Steele and Jean-François Thils, who joined the bank’s management board in January 2023--have made. Steele moved to EDB from JP Morgan, while Thils joined from BNY Mellon, like Claus. “We are clearly a bank. But we are a bank in a non-banking group. And in a non-banking group that is a very young group.”
Apex Group, of which EDB is a part, was founded in 2003. The bank itself, however, was founded in 1973 in Luxembourg and was initially part of a German private bank, Warburg. Apex acquired the bank in 2017, which was renamed EDB in 2019.
It’s “a fast-moving non-banking group that’s 20 years old,” said Claus. “But when you look at it, we’re 12,000 people today in the group. For a company founded 20 years ago, that makes us very different from many of the other players in asset servicing.”
Fast-paced “entrepreneurial culture”
“Larger groups tend to have been there for much longer, whereas we still have that kind of entrepreneurial culture, fast-paced,” argued Claus. “Of course, governance is absolutely important. Regulation is important. I’m not saying you could do what you like in this type of group.”
“But the difference in culture, in approach, is really interesting. In the end, that entrepreneurial spirit is all over us,” he added. And this, said Claus, is key.
“When you look at the client base we have, I would say 85% of our business is in alternative assets. And your typical alternative asset managers also have that entrepreneurial spirit. So there is that really nice cultural alignment with the client base, which is really important.”
Transforming the mindset
Of course, this shift in mindset is a big change, said Claus. “Coming from that German private-banking space, suddenly you find yourself in a fast-paced, entrepreneurial, privately-held global group focused on fund servicing--and the bank has an important role to play there--but it’s a completely different setup. So for the staff that have been here for a long time, one cannot underestimate the cultural transformation that they’ve gone through. So part of the focus has definitely been in building that engaged, top-quality team.”
If you don’t have the right team alignment, you cannot do anything successfully.
The members of EDB’s executive management board are relatively recent additions to the bank--Thils, Steele and Cecilia Gejke joined in January 2023, Claus in June 2022, managing director Holger Barth in May 2021--but looking at the extended management board, there are colleagues with a much longer tenure, said Claus.
“It’s nice to have that balance, because new blood, new perspectives are absolutely interesting. On the other hand, having those that have the longer memory, understand why a number of things are done one way, understand why a number of clients want them to do done this way is really helpful.”
The “people element”
“One fascinating element of what we’re doing is that whole people culture, and at the end of the day, I think in this business, if you don’t have the right team alignment, you cannot do anything successfully.”
A year and a few months into his role as CEO, Claus confirmed that the “people element” has been “absolutely interesting.” “You can never claim that that is done, because it will never be done. There will always be more you can do,” he said. “Once a team starts thinking that they’re there, and it’s fine, we can turn the page--that’s the end of a winning team. So we need to continue to up the game.”
Governance also key
The people element, therefore, is the first important element that EDB has been focusing on. “The second really important element that we’ve spent time and energy on” is governance, said Claus. “Doing the right thing and having a framework that helps you do the right things is not only what regulations expect us to do, but in addition, also creates kind of the necessary safeguards internally. Indeed, the framework is there to make sure that you go in the right direction, do the right things the right way.”
The firm has also made additions to its board of directors, including Gilda Neiman from Citibank, who brings “global banking perspective to the table” and has “completely reoriented herself towards ESG.”
Digitising banking a key priority
People and governance are essential, “but if all of that does not translate into business success, then at the end of the day, we will have a problem,” said Claus. “Investing in our banking platform and digitising the banking platform continues to be a key priority.” He also made reference to a commonly bemoaned issue in the grand duchy: the difficulty of opening a bank account.
“As I said before, 85% of what we do is alternative funds, which are typically big users of SPV [special purpose vehicle] structures, and these SPV structures--especially when they’re based here in Luxembourg--will always need Luxembourg bank accounts,” said Claus. “We know, as a financial centre, if we want to sustain that success, having these accounts is critical.”
This, therefore, can be seen as an opportunity. The advantage of digitising is that “it allows you to run that whole client experience in a nicer way, but also in a more efficient way.” Apex Group launched a digital banking platform through EDB last year. “It’s still early days,” he added, “but we are seeing new business coming in and we continue to see new demand for it.”
“This is not something that you do from one day to the next, but it’s certainly a positive differentiator that we’ve invested in, and we will continue to invest in, because the market need is absolutely there.”
Continuing to serve clients and optimise processes
That being said, another of EDB’s key priorities is to continue serving clients. “That whole client experience--in the end--this business is a people’s business. Yes, platforms are important, automation is important, investing in systems is important. But having the right approach in working with the client base is absolutely critical. So we’ll absolutely continue to focus on that,” said Claus.
Given market circumstances, interest rates and geopolitics, fund launches are a bit slower this year, noted Claus. “Last year, we had to do a lot of work in terms of streamlining the launching process,” but managing the launches this year has been easier.
Another point from the “client side of the story” is “conversions from other players,” he added.
In addition, Apex Group earlier this year acquired Bank of America’s Irish depositary business through EDB. Not only does this increase the amount of assets under management, but it’s also “from a client perspective, from a business perspective, another important element in addition to the launches and conversions.”
Besides optimising processes and making operations smoother, EDB is also looking at how they can leverage colleagues and other locations to better service the Luxembourg business. Claus mentioned, for instance, a global mobility programme that brought Apex Group employees from countries such as India and Mauritius to the grand duchy. “What we’re also looking at now is really making better use of other locations to help us in Luxembourg, which, simply from a risk perspective, gives us multiple markets to go into.”
What’s his motivation?
Throughout this entire interview, Claus has been enthusiastically speaking at a rapid pace and has hardly stopped to take a breath. My main takeaway, therefore, is that he appears to be very excited about all of the work ahead at EDB.
“It’s just a great project to work on,” Claus concluded in response to my comment. “Every morning, when I come in, I just know there are so many things that need to be worked on, where we can make a difference as a team overall. That’s not just the management team, that’s the entire team.”
“How often do you get these opportunities where there is so much that you can work on, that you can grow?” said Claus. “I think the whole project is a really exciting one.”
“When I think back about anything I’ve done, I always have enjoyed what I’m doing. Don’t get me wrong, I’m not naive enough to think that everything I do is fun--it isn’t. But I find it so important to be able to leave home in the morning and to say, ‘Look. This is an interesting day in front of me.’”
“And then when you can leave in the evening and say, ‘Yep. I’ve done plenty of things.’ Have I done everything I wanted to do? Probably not. Was everything I’ve done fun? No, not necessarily, but it was part of the job, and if I’ve done it well, that’s fine.”
“Fundamentally, being able to leave the office every evening and say, ‘You know what? I’m leaving the bank in a slightly better place than I found it when I came this morning, and we can do that again tomorrow.’ It kind of gives you that inherent motivation, inherent satisfaction.”
This article was published for the Delano Finance newsletter, the weekly source for financial news in Luxembourg. Subscribe using this link.