Thursday, October 27, 2016

Deutsche Bank: What’s behind the surprising profit? – MIRROR ONLINE

Deutsche Bank may yet surprisingly still positive: For the third quarter, the struggling group has recorded a profit of EUR 278 million. “We came during the renovation of our Bank is making good progress,” said group chief John Cryan. This was discussed a few weeks ago, and like the German government to rescue the Bank with taxpayers ‘ money. Everything is now good again? Answers to the important questions.

Why does the Bank suddenly again a tidy profit?

title of image

in the MIRROR

Heft 43/2016

Deutsche Bank: The history of doom

An important basis for the profit is the comparatively high income from the investment banking – the division, which has caused Deutsche Bank in the past, so much Trouble and for which you so highly criticized. Before deduction of taxes, the Bank earned almost one billion euros, with the trading of bonds, equities, foreign exchange and derivatives, as well as the advising and financing of companies in IPOs and the issuance of bonds. This was significantly more than in other areas, such as the private customer business.

However, the result is in the former flagship division is not quite as shiny as it first seems:

  • For one, has amassed the internal Bad Bank at the same time again, ordinary loss of 538 million euros. A good part of it goes to high-risk transactions entered into by the group earlier in the investment banking and he has to sell now with big losses.
  • secondly, the Bank earned level, especially in the interest rate trading well, the going to reduce it actually. In stock trading, in the consulting business and in the trade Finance income decreased – that’s where you want to be really greater.
  • And finally, makes the comparison with the rivals from the USA clearly how far the German Bank fell back in its former core area of investment banking. Goldman Sachs about earned in the past quarter, more than two billion dollars. In contrast, the profits of the Deutsche Bank are now Peanuts. And even in comparison with European rivals such as the British Barclays, the biggest money house of the Federal Republic is suspended in the meantime.

another reason for the profit, the lower than expected cost. The Bank has costs in the past quarter, less restructuring for restructuring the group recorded than analysts assumed. In addition, she has also returned less money to their many legal disputes. The provisions of this rose from 5.5 billion euros to 5.9 billion euros. Analysts had expected the Bank to get the cash for their more increasing.

Was exaggerated of course crash the stock market?

The decline of the Deutsche Bank share was dramatic. Within one and a half years, the Bank lost up to the end of September, more than two-thirds of their market value. Whether this sell-out was justified is difficult to say. Not because no one really knows how many risks, nor in the balance sheet of the Bank and in the Thousands of legal disputes lurk.

it is certain, however: The crash of the stock is dangerous. He reflects the loss of confidence of investors and the capital of the Bank to melt. Recently the leadership under the CEO Cryan. however, a little bit of breathing: in almost four weeks of stock increases short-at least slightly How fragile is the recovery, showed, however, this Thursday was the start of trading Deutsche-Bank-share-whether of the surprising Figures is still more than three percent in the Plus. By noon it became, however, already a small Minus.

the Deutsche Bank right now?

no, the Management claims. First, the major legal disputes are still unresolved. Of the amount of the settlements with the us authorities (see next question) depends on whether and to what extent, the Bank needs fresh capital. The capital weakness is considered to be the largest shortcoming of the Bank, it is unclear how fresh money could come from.

Secondly, the most recent Figures also show that the group continues to be a strategic Problem. Bank chief Cryan explained the business with corporate customers and payment transactions to the core of the strategy, in addition to stable areas such as asset management and private customer business, should play an important role. In the third quarter, customers have withdrawn more than € 20 billion, 17 billion euros were pulling customers from the management of assets. This testifies to a significant loss of confidence.

In the management of the assets lost, the Bank is also a leading Manager in Asia, the two most important heads are changed to UBS, and many customers and their assets should have taken it. A “brain drain” is also available in other areas.

regulatory authorities to make further pressure to shrink the investment banking business, which has contributed in the past quarter, much to the profit. In addition, the renovation and modernisation of the IT will cost a lot of money.

What is in the Bank?

The Well-being of the German Bank depends very much on the American Department of Justice (DoJ). The Ministry of justice wants the group loses with a comparison over 14 billion dollars for dirty shops in the us mortgage market in the years before the financial crisis. Although the Bank hopes to increase the amount of down act, but whether the succeed is questionable. Very helpful was that you snubbed the DoJ, by not explained by return of post to the public, you think to pay anywhere near as much. It is astonishing that the Bank has, of all things, laid in respect of this litigation in the third quarter, no further money back.

Large Fund companies such as Blackrock and Allianz subsidiary Pimco also want damages of the German Bank, also in connection with the us mortgage business. Whether and to what extent, the group has already selected, is unclear.

Further high fines>billions to threaten for the alleged involvement of the Deutsche Bank . Here, British and American authorities are investigating a multi-billion fine in the room. Also for the attempted Manipulation of the currency markets, sanction violations, and other improper transactions, the Bank could be asked in the United States or to the Fund.

Apart from the penalties of the American regulatory authorities require the Bank to improve their risk control systems . Otherwise, it is likely to fall in the coming year, through the stress test of the US-supervisors and ultimately to be able to in the USA, significantly less business.


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