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How Deutsche Bank's Performance Has Ranked Since The Fed Began Controlling Hiring, Risk-Taking

Wayne Duggan

The Wall Street Journal reported Thursday that the U.S. Federal Reserve assigned a secret “troubled condition” designation to Deutsche Bank AG (USA) (NYSE: DB) roughly a year ago.

Since that time, Deutsche Bank has been forced to clear hiring and firing decisions with the Fed and gain Fed approval for employee transfers and even certain severance payments, sources told the newspaper. 

Deutsche Bank stock plummeted more than 7 percent on the Frankfurt Exchange after the story was published, closing at a record low on the day.

It seems the Fed has been pulling the strings at Deutsche Bank for about a year now — but the company’s shareholders don’t have much to show for it. Deutsche Bank stock is now down 40 percent from a year ago, a much worse performance that competing European bank stocks such as Lloyds Banking Group PLC (ADR) (NYSE: LYG), Barclays PLC (ADR) (NYSE: BCS) and Credit Suisse Group AG (ADR) (NYSE: CS), all of which have generated returns of between positive 7.5 percent and negative 10.1 percent in the past year.

Deutsche Bank’s trailing 12-month revenue is also down 1.8 percent over the past year — roughly in-line with Credit Suisse’s 1.2-percent decline, below Barclays’ 1.2-percent gain and well above Lloyd’s 8.3-percent decline.

In the most recent quarter, Deutsche Bank reported a 79-percent decline in profits. In the same quarter, Credit Suisse reported a 57-percent increase in first-quarter profits. Excluding one-time charges, Barclays more than doubled its profits in the first quarter.

It’s still too early to determine what, if any, impact the Fed’s influence will have on Deutsche Bank in the long term.

At this point, the Fed’s helping hand has seemed more like a touch of death for Deutsche Bank investors.

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