|Bid||8.42 x 46000|
|Ask||8.44 x 42300|
|Day's Range||8.41 - 8.47|
|52 Week Range||6.44 - 9.47|
|Beta (5Y Monthly)||1.63|
|PE Ratio (TTM)||N/A|
|Forward Dividend & Yield||N/A (N/A)|
|Ex-Dividend Date||May 17, 2017|
|1y Target Est||6.26|
The U.S. Federal Reserve on Friday signaled it would take a lighter touch when supervising banks, in another win for the industry which has long complained that the regulator's closed-door supervisory process is opaque and capricious. In particular, foreign lenders Deutsche Bank, Credit Suisse, UBS and Barclays should no longer be held to the same supervisory standard as big U.S. banks after shrinking their combined U.S. assets by more than 50% over the past decade, said Fed governor Randal Quarles. "We have been giving significant thought to the composition of our supervisory portfolios and, in particular, to whether and how we should address the significant decrease in size and risk profile of the foreign firms," Quarles, who is also vice chair for Fed supervision, told a Washington conference.
DEEP DIVE Some investors are concerned the U.S. stock market may have gotten ahead of itself because price-to-earnings valuations have increased so significantly. The same couldn’t be said of the big U.
Days to Brexit: 14(Bloomberg) -- Sign up here to get the Brexit Bulletin in your inbox every weekday.What’s Happening? The U.K. economy’s post-election economic optimism is quickly disappearing.Boris Johnson’s decisive election win before Christmas was supposed to provide a much-needed fillip for the U.K.’s sluggish growth rate, lifting near-term Brexit uncertainty and finally allowing companies to plan for the future.Still, signs of a “Boris bounce” aren’t too strong. While some private surveys have shown signs of a pick up in sentiment, this week has seen a string of disappointing data, including evidence that the economy was unexpectedly contracting before the vote. Inflation and retail sales reports for December, which included the period immediately after the election, came in well below expectations, suggesting U.K. consumers may be losing some of their resilience.That’s taken a chunk out of the pound, which has fallen more than 1.7% against the dollar this year. Combined with dovish noises from Bank of England policy makers, traders now put the chances of an interest-rate cut later this month at more than 70% — levels which indicate near-certainty for some in the market.Analysts don’t see pressure on the pound ebbing any time soon: Deutsche Bank said today that a rate cut could be followed by a new cycle of quantitative easing. More data is due next week, with the forward-looking Purchasing Managers Index likely to influence whether the BOE takes action“If you look at the fundamental driver behind U.K. economic weakness, it has been Brexit. And the reality is Brexit uncertainty is not going to go away,” George Saravelos, the bank’s global head of currency research, told Bloomberg TV.Beyond BrexitEven after 20 years at the top, Russian President Vladimir Putin still knows how to play power politics. Twitter CEO Jack Dorsey asked Tesla boss Elon Musk how he would fix the social network. How many billionaires are attending next week’s World Economic Forum in Davos, Switzerland?Sign up here to receive the Davos Diary, a special daily newsletter that will run from Jan. 20-24.Brexit in BriefReassurance | EU citizens who have not secured “settled status” by the deadline of June 2021 will not automatically be deported from the U.K., Downing Street confirmed.Big Bong Update | The Brexiteer campaign to raise funds for Big Ben to bong on Jan. 31 continues apace, with more than £222,000 ($289,000) now pledged. Lawmaker Mark Francois, who is leading the bong bid, told the BBC that Brexit-backing businessman Arron Banks has pledged £50,000.Preparation Costs | The U.K. has already committed to spend £6.3 billion on preparations for Brexit, the Institute for Government notes in a briefing paper on government readiness. That’s roughly the equivalent of a railway extension project or two new aircraft carriers, the IfG says. Another £2 billion is set aside for 2020-2021.Tell Us Your Plans | Brexit is two weeks away. We’re curious how you, our loyal Brexit Bulletin readers, are planning to mark the moment. Get in touch and let us know, by emailing email@example.com.Want to keep up with Brexit?You can follow us @Brexit on Twitter, and listen to Bloomberg Westminster every weekday. It’s live at midday on Bloomberg Radio and is available as a podcast too. Share the Brexit Bulletin: Colleagues, friends and family can sign up here. For full EU coverage, try the Brussels Edition.For even more: Subscribe to Bloomberg All Access for our unmatched global news coverage and two in-depth daily newsletters, The Bloomberg Open and The Bloomberg Close.\--With assistance from Greg Ritchie.To contact the author of this story: David Goodman in London at firstname.lastname@example.orgTo contact the editor responsible for this story: Adam Blenford at email@example.com, Chris KayFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- A breed of systematic trader acutely sensitive to volatility is charging into U.S. stocks at the kind of pace last seen before “volmageddon” rocked Wall Street almost two years ago.Volatility-targeting funds are doubling down on equities after geopolitical turmoil that threatened to derail the bull market in the end barely slowed it down. These players buy and sell based on price swings, and their leverage -- a measure of exposure to stocks -- now sits at its 81st percentile since 2011, according to Morgan Stanley.That might be a cause for hand-wringing in some quarters of the market, as it echoes the run-up to February 2018, before a swift de-risking by systematic players is thought to have intensified a market plunge. Algorithmic traders are often seen as weak hands because many strategies are at the mercy of signals that can flip on a dime.“Considering that systematic strategies are very levered, traditional investors’ gross and net exposures are very high, and retail traders are also more levered-up -- that leaves us susceptible to a real draw-down,” said Alberto Tocchio, chief investment officer at Colombo Wealth SA, a Swiss wealth manager that oversees 2.5 billion Swiss francs ($2.6 billion).Fortunately, conditions look very different from 2018, Nomura’s Masanari Takada wrote in a note today. Pointing to a lack of fear in the VIX options market, the quant strategist says any short-term dips would likely be treated by investors as buying opportunities.Meanwhile, the trigger fingers of vol-targeting funds, which by one estimate hold around $400 billion, may be firmer than thought after an extended stretch of tranquility, according to Deutsche Bank AG strategists led by Binky Chadha. These strategies typically load up on stocks when markets are calm and sell when volatility hits.“They would need to see a large and sustained spike in vol for their selling thresholds to be hit,” the team wrote.Animal SpiritsStill, there’s little doubt that equity positioning by systematic strategies is stretched. The leverage of short-term trend-followers known as CTAs is at the 78th percentile since 2011, according to Morgan Stanley.And animal spirits are in the air, with Bank of America Corp. strategists led by Michael Hartnett writing this week they’re staying “irrationally bullish until peak positioning and peak liquidity incite a spike in bond yields and a 4-8% equity correction.”The possibility that CTAs sell en masse on a change in market dynamics “cannot be ignored,” Nomura’s Takada wrote in an email.“If any unpredictable but tiny shock causes a correction in the upward momentum of a U.S. stock price index like the S&P 500, systematic trend-followers are likely to rush into exiting from their current bullish trades simultaneously,” he said.\--With assistance from Justina Lee.To contact the reporter on this story: Ksenia Galouchko in London at firstname.lastname@example.orgTo contact the editors responsible for this story: Blaise Robinson at email@example.com, Yakob Peterseil, Sam PotterFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Want the lowdown on European markets? In your inbox before the open, every day. Sign up here.The pound is sliding as souring economic data raise the prospect of an interest-rate cut as soon as this month. Deutsche Bank AG says that may just be the start of a longer easing cycle that piles extra pressure on the U.K. currency.Not only does George Saravelos, the bank’s London-based global head of currency research, see a decline in borrowing costs in January, he thinks policy makers may opt for a drop in March, too, and then possibly begin quantitative easing.“Even if you get some election bounce, we don’t think it’s going to be sustained and the risk is the Bank of England has to do Q-eternity,” Saravelos told Bloomberg Television’s Francine Lacqua on Friday. In 2015, he was part of a team that forecast correctly that the pound would drop to its weakest level since 1985 in the following years.Sterling extended its decline against the dollar to as much as 0.4% after his comments, exacerbating a selloff that was triggered by an unexpected plunge in U.K. retail sales. The data increased bets the BOE may lower borrowing costs this month, with money markets pricing in a more than 70% chance of a cut on Jan. 30, up from 62% on Thursday.Traders had been speculating that the central bank will ease rates at Mark Carney’s last MPC meeting as BOE governor after a flurry of dovish comments from policy makers and a series of disappointing economic data releases.That, coupled with fears of a chaotic divorce from the European Union, has overshadowed euphoria from the Conservatives’ election victory in December and weighed on the pound this year.Saravelos said the pound appears overpriced and should be trading closer to 87 or 88 pence per euro, compared to about 85 pence on Friday. He added that the bank is negative on sterling.“The economy is in recession, the data so far is pointing in that direction,” Saravelos said. “If you look at the fundamental driver behind U.K. economic weakness, it has been Brexit. And the reality is Brexit uncertainty is not going to go away.”Starting from the aftermath of the financial crisis, the U.K. central bank bought a total stock of 435 billion pounds ($568 billion) of bonds in an effort to revive the economy. The BOE has leeway for any return to QE, with a self-imposed limit of buying 70% of outstanding gilts. The European Central Bank is able to purchase 33% of outstanding debt from qualifying member states.Investors are now turning their attention to impending purchasing mangers’ indexes for further signs of the BOE’s direction.Sterling retreated 0.3% to $1.3040 as of 2:45 p.m. in London. The yield on 10-year U.K. government bonds dropped a sixth day to 0.64%, on course for its longest falling streak since August.“Clearly, there is a chance for a decent rebound of the PMIs next week and this may stay the BOE’s hand,” said Valentin Marinov, a strategist at Credit Agricole SA. “That said, following this week’s weaker CPI and retail sales, the bar for stable rates is getting very high.”What Bloomberg Intelligence Says”The BOE may run out of patience if PMI data next week don’t see a decent bounce. There is low visibility as to whether growth will rebound after the election, so it may be best to risk manage receiving positions in GBP short-end rates given current pricing for a cut. The cross-market theme of gilts outperforming bunds and U.S. Treasuries remains.”\-- Tanvir Sandhu, Chief Global Derivatives Strategist(Adds context on QE, additional comments from Saravelos from seventh paragraph.)\--With assistance from Greg Ritchie and Anooja Debnath.To contact the reporters on this story: Love Liman in Stockholm at firstname.lastname@example.org;William Shaw in London at email@example.comTo contact the editors responsible for this story: Dana El Baltaji at firstname.lastname@example.org, William ShawFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Sign up here to receive the Davos Diary, a special daily newsletter that will run from Jan. 20-24.British consumers shunned stores during the crucial Christmas trading period, confounding predictions of a rebound in spending and stoking speculation that the Bank of England will cut interest rates this month.The pound fell after the report, the latest in a string of disappointing U.K. data in recent days, and traders moved to price in a 75% chance of a cut at the BOE’s Jan. 30 meeting.The volume of goods sold in stores and online fell 0.6% in December, confounding expectations of a 0.6% increase. Sales excluding auto fuel dropped 0.8%. The period included Black Friday and Cyber Monday, when price cuts would be expected to attract shoppers to stores.Weak growth and inflation figures this week have added to expectations, fueled by dovish comments from BOE Governor Mark Carney and other policy makers, that a rate cut could be imminent. Crucially, the sales survey was taken between Nov. 24 and Dec. 28, meaning much of it encompassed the period following Boris Johnson’s commanding win in the Dec. 12 general election -- undermining speculation the economy will see a bounce amid reduced political uncertainty.What Our Economists Say:“Whether the Bank of England cuts interest rates on Jan. 30 now hangs in the balance and makes the PMI survey next week a make-or-break data point.”\-- Niraj Shah, Bloomberg Economics. For the fullU.K. REACT, click hereRetail sales have fallen or stagnated in each of the past five months, the longest run without growth since records began in 1996, the Office for National Statistics said Friday. A 1% decline in the fourth quarter was the largest since the start of 2017 and weighed on the economy.The pound erased its earlier gains after the data, to trade down 0.1% at $1.3063 as of 10:10 a.m. London time.Stores widely reported having to offer deep discounts to beat off competition and lure customers in the runup to Christmas. Prices as measured by the retail sales deflator fell 0.6% on the month.That’s hit stores from Marks & Spencer Group Plc to John Lewis Partnership Plc, while the British Retail Consortium described 2019 as the worst year on record for the sector with revenue down on 2018. Retailers have underperformed the U.K. market as a whole this year.Sales in December fell across the board, with non-food sales declining 0.9% and food sales dropping 1.3%, the most since December 2016. Petrol stations and online retailers had a better month.There were also sweeping declines during the quarter, with clothing and footwear down 2.3% and non-store retailing falling 3.2%.With some BOE officials indicating signs of a post-election recovery may be enough to stave off a cut, the most high-profile figures before the Jan. 30 decision are now the Purchasing Managers Indexes due to be released next Friday.(Adds pound, chart.)\--With assistance from David Goodman.To contact the reporters on this story: Andrew Atkinson in London at email@example.com;Lucy Meakin in London at firstname.lastname@example.orgTo contact the editors responsible for this story: Fergal O'Brien at email@example.com, Andrew Atkinson, Brian SwintFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- A Deutsche Bank-led consortium’s efforts to buy out the debt of a power plant operator in eastern India have advanced, after no rival bidder emerged.The struggling utility is Jindal India Thermal Power Ltd., one of a string of power plants being put up for sale by banks stuck with their defaulting debt.The sector has been hit hard by oversupply in recent years, a consequence of a costly push to bridge India’s once chronic power deficit and expand reach to under-supplied rural areas. Power generators form a significant chunk of India’s $130 billion bad loan pile.The consortium offered 24 billion rupees ($339 million) in cash to settle the company’s 76 billion rupee debt including interest due as of end March, which is currently being restructured, said the people, asking not to be identified citing confidentiality. The unsolicited offer was opened up to competing bids in an auction but no rival emerged by the deadline last week, the people said.Success for the Deutsche Bank group deal could help preserve the 33.98% equity stake that the BC Jindal Group held as of March 31, 2019.BC Jindal Group company shares jumped. Jindal Photo Ltd. rose as much 12.2%, the most in seven months. Jindal Poly Films Ltd. shares were up as much as 20.3%, the most in over six years.The offer would effectively mean that creditors, led by Punjab National Bank, would recover a fraction of their outstanding debt holdings, the people said. Typically, if lenders do not agree with a debt-recast plan, they have the option of taking the company to bankruptcy.A spokesman for Deutsche Bank declined to comment and a representative for Punjab National Bank didn’t immediately respond to an email seeking comment.(Adds details, Group share prices)\--With assistance from Denise Wee.To contact the reporters on this story: Bijou George in Mumbai at firstname.lastname@example.org;Suvashree Ghosh in Mumbai at email@example.comTo contact the editors responsible for this story: Andrew Monahan at firstname.lastname@example.org, Denise WeeFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- The Trump administration plans to restrict the news media’s ability to prepare advance stories on market-moving economic data, according to people familiar with the matter, in a move that could create a logjam in accessing figures such as the monthly jobs report.Currently, the Labor Department in Washington hosts “lockups” for major reports lasting 30 to 60 minutes, where journalists receive the data in a secure room, write stories on computers disconnected from the internet, and transmit them when connections are restored at the release time.The department is looking at changes such as removal of computers from that room, and an announcement could come as soon as this week, said the people, who spoke on condition they not be identified. While the rationale was unclear, the government has cited security risks and unfair advantages for news media in prior changes to lockup procedures.Lockups, which are permitted but not required by government regulations, have been a mainstay for U.S. media for almost four decades. They have been designed to give reporters time to digest figures on market-moving data and make sure they are accurate before distributed en masse to the public. Statistics agencies and central banks in the U.K. and Canada use similar lockup procedures.The U.S. move would upend decades of practice, and media organizations including Bloomberg News and Reuters have challenged prior changes to procedures. The shift could also spur an arms race among high-speed traders to get the numbers first and profit off the data, raising questions about fairness in multitrillion-dollar financial markets.Michael Trupo, a spokesman for the Labor Department, didn’t respond to multiple requests for comment. The Commerce Department -- which provides advance access to its reports such as gross domestic product and retail sales at the Labor-hosted lockups -- referred questions on the matter to Labor.Without news services transmitting their reports at the release time and allowing additional access points, the government may have to prepare its websites to handle potentially heavier loads under the new system, which could mean adding security measures or increasing the traffic capacity.“Obviously some firms are bigger than others, some have more resources than others, and some will make a choice in the environment that might ensue to dedicate more resources to this, so I do think the playing field at the margin would be less level,” said Stephen Stanley, chief economist at Amherst Pierpont Securities.Previous PlanIn 2012, the Labor Department under the Obama administration sought to alter lockups to require journalists to use government-owned computers to write their stories. Officials at the time framed the change as addressing security risks.After protests from Bloomberg News and other news organizations, and a congressional hearing in which editors testified, the department agreed to allow the media to continue using their own equipment and data lines. Reporters are required to leave mobile phones and other electronic devices in lockers outside of the lockup room, along with personal effects such as umbrellas and purses.The Labor Department move would follow a similar decision by the U.S. Department of Agriculture in 2018 to scale back lockups covering farm products, particularly the closely-watched monthly crop forecasts that typically move markets in soybeans, corn and wheat.From 2018: What’s a ‘Lockup’ Anyway and Why It Matters for CropsAgriculture Secretary Sonny Perdue said at the time that because of technological changes, journalists can now get information to their readers faster than the USDA can put it on its website, creating an unfair advantage.The USDA’s releases since the change haven’t been without hiccups: In November, for about six minutes after the release time, the website produced an error message.The Federal Reserve separately hosts its own media lockups where journalists get advance access to interest-rate decisions, meeting minutes and industrial-production data, and write their stories on computers in a secure room.“The in-depth media analysis is sought to further understand the details, get a trusted interpretation and also make sense of a market move that does not match your own expectation,” said Delores Rubin, a senior equity trader at Deutsche Bank Wealth Management. “It is hard to say if the impact will create more volatility on economic data releases or a pause as traders wade through the details of the data or await the media analysis.”Government BurdenWithout news services like Bloomberg News and Reuters transmitting their reports at the precise release time and allowing additional access points, the lockup changes put the burden on the government to ensure that its website remains accessible while being bombarded by everyone from algorithmic traders to the general public.U.S. government websites aren’t immune from attack or technical issues that could limit public access. In 2013, the Obamacare website crashed when millions tried to access it and register under the then-new health care program, preventing Americans from enrolling in coverage until months later, after a frantic repair effort.Earlier this month, a pro-Iran group hacked a U.S. government website -- the Federal Depository Library Program -- and posted messages related to the U.S. killing of a top Iranian commander.The Obama administration’s Labor Department said in its November 2016 transition document that it took “costly security measures” including a technology upgrade to protect the data, and “significant personnel and financial resources are also required to host each lockup.”(Adds economist’s comment in eighth paragraph.)\--With assistance from Michael Riley, Alyce Andres, Vildana Hajric and Emily Barrett.To contact the reporters on this story: Katia Dmitrieva in Washington at email@example.com;Vince Golle in Washington at firstname.lastname@example.orgTo contact the editors responsible for this story: Margaret Collins at email@example.com;Scott Lanman at firstname.lastname@example.orgFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
While it may not be enough for some shareholders, we think it is good to see the Deutsche Bank Aktiengesellschaft...
(Bloomberg Opinion) -- You’d expect the world’s second-largest economy to have a bigger presence on the world stage. But in mergers and acquisitions, China’s presence has been shrinking for years, and 2020 is unlikely to be any better.In 2016, the country was the world’s largest acquirer of overseas assets after the U.S. It tumbled to eighth place this year, trailing Japan and even Singapore, according to data compiled by Bloomberg. While the phase-one trade deal between Washington and Beijing may ease some tensions, frosty relations between China and many developed countries appear set to persist. Add tightened credit to this protectionist mix, and China’s acquisitions have little chance of regaining the heights of 2016, when state-owned China National Chemical Corp. agreed to pay a record $43 billion to buy Swiss agrochemical maker Syngenta AG.Washington turned more hostile to Chinese purchases of U.S. assets after Donald Trump gained the presidency, and since has become only more strict. The Committee on Foreign Investment in the United States, a federal panel that reviews acquisitions on national-security grounds, even started including purchases of data on American customers in its checks. The Trump administration has also sought to enlist U.S. allies in squeezing out Huawei Technologies Co. as a supplier of fifth-generation wireless equipment.Such actions have been seen as a clear shot at the Made in China 2025 plan, which set targets for the country to become a leader in critical technologies. Chinese venture capital investment in the U.S. fell 27% to $1.1 billion in the first half of 2019, from $1.5 billion in the July-December period last year, according to Rhodium Group LLC, an independent research firm.Europe, previously more receptive to Chinese investment, has turned a lot less welcoming on the sale of technology and infrastructure. Regulators took their time approving what could have been China’s largest overseas deal of 2019 — the 9.1 billion euro ($10.2 billion) takeover of Portuguese utility EDP-Energias de Portugal SA, prompting state-owned buyer China Three Gorges Corp. to pull out in April. Germany, meanwhile, is looking at putting tighter restrictions on Chinese buying following high-profile investments in companies such as Deutsche Bank AG and industrial robot maker Kuka AG in recent years. A push by lawmakers to ban Huawei from its 5G network threatens to further chill relations. Even President Xi Jinping’s signature Belt and Road Initiative, which prompted a wave of Chinese acquisitions in countries that have signed on to the trade-infrastructure campaign, has faced a backlash.Beijing’s drive to control debt has played a part in tamping down deals. After the ill-fated spending sprees of conglomerates such as HNA Group Co. and Anbang Insurance Group Co., now being unwound, companies have become more cautious. Chinese banks are less aggressive when it comes to lending for overseas purchases, according to Bee Chun Boo, M&A partner at Baker McKenzie’s Beijing office. The average size of China’s foreign acquisitions has shrunk by two-thirds since 2016 to $74 million, from $230 million (a figure that already strips out the Syngenta deal). Chinese buyers have stopped seeking controlling stakes to avoid raising protectionist hackles, and are searching out non-Chinese buying partners.Anta Sports Products Ltd.’s $5.2 billion purchase of Finland’s Amer Sports Oyj is an example of what the typical Chinese acquisition may look like in coming years. Anta led an investor group that included Lululemon Athletica Inc. founder Chip Wilson, and the target — a tennis racket maker — was in a non-sensitive sector. With the environment souring in the U.S. and Europe, Chinese acquirers will look more within Asia. In September, China Telecommunications Corp.’s entered a $5.4 billion agreement to set up a third major Philippine telecom operator with two local partners.The home market may provide more promising action for China-focused bankers in the year ahead. Beijing is opening its financial sector, inviting more foreign banks, insurance providers and other companies to set up shop. In November, Chubb Ltd. paid $1.5 billion to boost its stake in Huatai Insurance Group, and Allianz SE forked out about $1 billion for part of Goldman Sachs Group Inc.’s stake in Taikang Life Insurance Co. Deal activity may accelerate in 2020, when foreign securities firms, futures businesses and life insurance companies will be allowed to fully own their Chinese units.As financial companies enter, others are leaving. Chinese buyers are picking up the pieces as Carrefour SA and Metro AG sell the bulk of their local operations, joining Tesco Plc and Distribuidora Internacional de Alimentacion SA in giving up on a tough retail market. Nestle SA is another international company considering options for its Chinese units.Advising on exits is a shrinking business by nature, though, and unlikely to compensate for the fall-off in China’s outbound deals. No China M&A banker is going to be partying like it’s 2016.\--With assistance from Yuan Liu and Elaine He. To contact the author of this story: Nisha Gopalan at email@example.comTo contact the editor responsible for this story: Matthew Brooker at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Nisha Gopalan is a Bloomberg Opinion columnist covering deals and banking. She previously worked for the Wall Street Journal and Dow Jones as an editor and a reporter.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Cerberus, one of Deutsche Bank's largest shareholders, will no longer provide paid advice to the bank on how to run its business, a person with knowledge of the matter said on Monday, a role that has been criticized for potential conflicts of interest. The following year, Cerberus' consulting arm also began advising the bank on how to cut costs and find new sources of revenue, for which Deutsche paid fees.
(Bloomberg) -- Deutsche Bank AG’s controversial advisory contract with Cerberus Capital Management LP probably won’t be renewed when it expires at the end of this month, people familiar with the matter said.The German lender last year hired a unit of the U.S. private equity firm, which is one of Deutsche Bank’s largest shareholders, to help it identify savings and improve liquidity management. The mandate, overseen by Cerberus President Matt Zames, raised concerns that the U.S. investor may gain access to privileged information that other shareholders don’t have.To help ease such concerns, Cerberus was banned from buying or selling Deutsche Bank shares for the duration of the mandate.“Cerberus Operations and Advisory Company has been a great support since mid-2018 and helped us to get our deep transformation going,” a Deutsche Bank spokesman said in a statement. “Now it is all about execution.”Cerberus separately praised Deutsche Bank Chief Executive Officer Christian Sewing’s performance without providing further details on the mandate. “We remain confident in his team’s ability to execute on the restructuring plan to improve the bank’s financial and operating performance.”Deutsche Bank is the most high-profile among several investments Cerberus has made in Europe’s beaten-down bank stocks. It’s also an unusual one because as a minority shareholder with about 3% of the voting rights, the firm can’t control the lender or take it private as buyout firms typically do, limiting its options to boost the value of the holding.Deutsche Bank’s share price has dropped by more than half since Cerberus first announced taking a stake in November 2017. The firm also holds a 5% stake in Commerzbank AG, the second-largest listed bank in Germany. That stock has lost almost half of its value since the investment was first announced.Cerberus had backed merger talks between both German lenders earlier this year, according to people familiar with the matter, but those discussions ultimately failed.To contact the reporters on this story: Steven Arons in Frankfurt at email@example.com;Nicholas Comfort in Frankfurt at firstname.lastname@example.orgTo contact the editors responsible for this story: Dale Crofts at email@example.com, Ross Larsen, Christian BaumgaertelFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Benchmark 10-year bonds rallied from near a three-month low after the central bank said it will buy 100 billion rupees ($1.4 billion) of longer-tenor bonds while selling shorter debt in a move reminiscent of the U.S. Federal Reserve’s Operation Twist.The yield on the 2029 debt fell as much as 16 basis points to 6.59%, the most in more than two months, making it Asia’s top performer. The 7.57% 2033 yield also slid 20 basis points. Yields on the 6.35% 2020 bond -- a very short-end paper -- jumped 20 basis points.The move had been suggested by some traders and strategists as a way to pass on more of the central bank’s five rate reductions this year to businesses and individual borrowers. With investment and consumption both weak in India, policy makers are trying to spur credit and lift growth from a six-year low.“The relentless steepening of the yield curve is getting pacified by the RBI coming in and signaling ‘I am here to support,’” said Lakshmi Iyer, chief investment officer for fixed income at Kotak Mahindra Asset Management Co. in Mumbai. “This move brings some sort of a sanity check.”READ: Time for Unconventional RBI Measures, Bond Manager SaysThe Reserve Bank of India in a statement late Thursday said it will buy 100 billion rupees of the 2029 debt and sell an equal amount of notes maturing next year in an auction on Monday.The concept is similar to Operation Twist used by the Fed in 2011-2012 in an effort to cheapen long-term borrowing and spur bank lending. The Fed then swapped short-term Treasury securities for longer-term government debt, which reduced the gap between two- and 10-year yields.In India, the difference between the benchmark 10-year yield and the RBI’s policy rate was 160 basis points before the announcement. That’s way higher than the average spread of 55 basis points seen during the 2015-2017 easing cycle, according to Deutsche Bank.The steepening of the curve in the longer end reflects concerns about the government adding to record borrowing as it gets ready to prime the economy. The slowdown has reinforced doubts about the administration meeting its budget aim of 3.3% of GDP this fiscal year.“The RBI should increase the intensity of its Operation Twist via more vigorous switches of government bonds focused on securities in the tenure of 7-10 year plus,” said Madhavi Arora, economist at Edelweiss Securities Ltd.Future operations will depend on the success of Monday’s auction, traders say.“There’s limited appetite for short-end bonds so the RBI will need to offer higher yields,” said Naveen Singh, head of fixed-income trading at ICICI Securities Primary Dealership.To contact the reporters on this story: Subhadip Sircar in Mumbai at firstname.lastname@example.org;Kartik Goyal in Mumbai at email@example.comTo contact the editors responsible for this story: Tan Hwee Ann at firstname.lastname@example.org, Jeanette Rodrigues, Ravil ShirodkarFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Australia's biggest lenders are bracing for another year of pain as the fallout from a string of scandals shows no sign of letting up following a blistering public inquiry into financial sector misconduct. "The Royal Commission didn't mark the end of their problems," said Sean Sequeira, chief investment officer at Australian Eagle Asset Management, referring to the government-led inquiry into wrongdoings in the industry. This week, National Australia Bank executives endured a six-hour annual general meeting as investors grilled management a day after regulators filed a lawsuit against the bank over fee charges.
The Pennsylvania Treasurer sued 16 of the world's largest banks over a scheme that involved price-fixing of bonds from government-sponsored entities like Freddie Mac and Fannie Mae.
California Governor Rejects PG&E Restructuring Plan PG&E (NYSE:PCG) wants to restructure after bankruptcy, but California governor Gavin Newsom won’t allow it, at least under current proposals. He says that the monopoly’s proposals do not adequately meet the requirements of a new wildfire law. PG&E has until Tuesday to submit a new plan that Newsom likes. […]The post Market Morning: PG&E Bankruptcy Trouble, Trade Deal, Costco Holiday List, Trump Financial Records appeared first on Market Exclusive.
(Bloomberg Opinion) -- As 2019 draws to a close, there’s more than a whiff of banking deregulation in the air. The U.S. has relaxed its lender stress tests and made it easier again for Wall Street to trade using its own funds. In Europe, capital requirements are being softened.The reining in of bank risk after the financial crisis is giving way to a loosening of the rules just as the desperation for yield makes banks more willing to gamble. This seems imprudent: Although banks are safer than they were before Lehman Brothers imploded, critical weaknesses remain.Sheila Bair was chair of the U.S. Federal Deposit Insurance Corp. — the body that preserves confidence in the American banking system — from 2006 through 2011, and she’s a current board member at Industrial & Commercial Bank of China Ltd. As such, she has a unique insight into how far lenders have changed. I interviewed her in Washington DC recently for a Bloomberg Storylines episode about Italy’s Banca Monte dei Paschi di Siena SpA, “How a $450 Million Loss Was Made to Disappear.”In November, 13 bankers from Paschi, Deutsche Bank AG and Nomura Holdings Inc. were convicted for helping the Italian lender hide losses in 2008. It may be an old case but it still serves as a cautionary tale of how banks can massage their numbers.Crucially, as I discussed at length with Bair, banks’ accounts are still impenetrable and reforms have done little to improve transparency. Complex transactions can obfuscate lenders’ true financial health, while more detailed rules have made regulatory reporting and external scrutiny even harder.Here’s an edited transcript of our conversation:ELISA MARTINUZZI: Before Monte Paschi, Lehman Brothers had also used an accounting trick, “Repo 105,” to make its books look stronger. What have we learned from Lehman?SHEILA BAIR: The continued availability of accounting tricks to dress up your regulatory ratios and your public disclosures, I think. And it’s still going on.EM: How far has post-crisis regulation curtailed the banks’ capacity to work around the requirements?SB: Whether it’s [tackling the] accounting gimmicks people used to game their regulatory ratios or just more fundamentally how much capital and liquidity there is in this system, we’ve made them a little better. But we really haven’t made any kind of fundamental reforms.EM: How concerned should taxpayers be?SB: As a citizen worried about the stability of the economy, which relies on a stable financial system, I think people should still be concerned. There’s this kind of assumption that it’s yesterday’s news. And I think that’s probably ill-advised because I think there’s still some real fragility in the system.There’s too much complexity around the financial instruments that we tolerate on regulated banks, the exposures that they take. And frankly, culture too. I mean, do bank managers of integrity use derivatives to dress up their balance sheet or try to hide a risk and losses that they have? No, I don’t think good managers would do that. But there probably is still a culture problem too in the financial services industry that management will entertain strategies like that when they shouldn’t.EM: How has transparency around disclosures improved?SB: If anything, we’ve made it harder because it seems so many of the rules, especially around capital and liquidity are so complex to the extent investors or others — analysts, journalists — want to determine how good those rules are and how effectively banks are complying with those rules. I think the complexity really hinders that kind of outside discipline. It’s kind of an inside game now with the banks and their supervisors.EM: Where do you see systemic risk building up today? Is it away from the banking industry?SB: Nothing’s really outside the banking sector, because we [saw] during the subprime crisis too that all of these toxic mortgages were being passed on broadly to investors.EM: Are memories of the financial crisis fading?SB: It really distresses me, because having lived through that and thinking that we had learned our lesson, to see what’s going on now [simplifying and weakening the post-crisis rules] is just wrongheaded. The debate we should be having is what’s going to happen in the next year or two if the U.S. economy, or more likely the global economy, slides into recession; how well banks are prepared, should they be building a bit more of their capital cushion now?EM: Are you confident we won’t be seeing another Monte Paschi? SB: No, I'm not confident that we won't. I absolutely would say that I'm not confident we won't. No, no, no.To contact the author of this story: Elisa Martinuzzi at email@example.comTo contact the editor responsible for this story: James Boxell at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Elisa Martinuzzi is a Bloomberg Opinion columnist covering finance. She is a former managing editor for European finance at Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
The Supreme Court said Friday it will hear three cases next year involving President Donald Trump's financial records. Trump has sought to keep his tax and bank records private, and rulings against him could result in the quick release of personal financial information, the Associated Press wrote. Arguments will take place in late March with decisions poised for June.