|Bid||7.03 x 555100|
|Ask||7.04 x 230000|
|Day's Range||6.88 - 7.07|
|52 Week Range||5.80 - 11.28|
|Beta (3Y Monthly)||1.50|
|PE Ratio (TTM)||703.80|
|Earnings Date||Jul 24, 2019|
|Forward Dividend & Yield||0.11 (1.63%)|
|1y Target Est||N/A|
(Bloomberg) -- Federal Reserve Chairman Jerome Powell left it all but certain that the U.S. central bank will reduce interest rates this month for the first time in a decade.The debate now is how deep they will cut and what will they do afterward. As the July 30-31 meeting nears, here’s the outlook of some of the world’s biggest banks based on recent research reports.Forecasts range from JPMorgan Chase & Co. and Citigroup predicting a 25 basis point cut to Morgan Stanley forecasting double that amount.Goldman Sachs Group Inc.25 basis point reduction in July25 basis points of cuts in rest of 2019Powell offered a somewhat upbeat baseline view of growth, but nonetheless argued that uncertainty “continues to weigh” on the outlook. In our view, this was a strong signal that the trade truce with China and the strong June jobs reports have not derailed the case for a July rate cut. We increased our odds of a rate cut; for the July meeting, we place the subjective odds of a 25 basis point cut at 75%, a 50 basis point cut at 15% and unchanged policy at 10%. Our modal expectation remains a 25 basis point cut at both the July and September meetings.JPMorgan Chase & Co.25 basis point reduction in July25 basis points of cuts in rest of 2019It is understandable that Chair Powell remained committed to the storyline supporting action in July. The global backdrop remains concerning, as business sentiment continues to deteriorate and the disinflationary headwinds from slowing producer price index growth will weigh on corporate profits through the current quarter at least. Combined, this is damping global capex growth and feeding back to weakness in global industry. While the case for a 50 basis point cut has been undermined, the case for 25 basis point remains firmly in place and we stick with our call. Whether this is followed by 25 basis point in September will be highly data dependent.Morgan Stanley50 basis point reduction in JulyNo further cuts in rest of 2019The global economy has lost significant momentum in the past 12 months and trade tensions linger. This is now filtering through more prominently to the U.S. economy. Risks to the outlook remain skewed to the downside. A non-linear impact to growth could materialize if financial conditions tighten, bringing corporate credit risks to the fore. We therefore see a need to act decisively to protect against uncertainty and downside risks. Hence, we continue to expect a quick and front-loaded adjustment, i.e. 50 basis points cut by the Fed in July.Citigroup Inc.25 basis point reduction in JulyAnother 25 basis point cut expected this year, most likely in SeptemberEvents and data played out as we had expected – particularly the above-consensus June jobs number and benign G-20 outcome. While in our view this has decreased downside risk, that view is clearly not shared by Chair Powell. We are consequently falling in line with consensus and expect a 25 basis point rate cut in July. A 50 basis point cut is a real possibility, but given that even a 25 basis point cut is likely to provoke two or more dissents, 25 basis points may be the compromise policy outcome. Following the July cut we expect one additional 25 basis point cut, most likely in September.Bank of America Corp.25 basis point reduction in July50 basis points of cuts in rest of 2019Fed Chair Powell all but promised that a cut is coming in July. He is unfazed by the recent strong data in the U.S. The challenge is that this may not be a consensus view, making it difficult but not impossible to deliver a 50 basis point cut. For the time being, we should focus nearly as much on key global data as on U.S. indicators.Barclays Plc25 basis points cut in July50 basis points of cuts in rest of 2019Chair Powell’s testimony before the House Financial Service committee was surprisingly dovish. (The) congressional testimony increases our confidence in our forecast for at least a 25 basis point cut in the funds rate at the July Federal Open Market Committee meeting, followed by another 50 basis points in cuts by year end.UBS Group AG50 basis point reduction in JulyNo further cuts in rest of 2019At the June FOMC, Chair Powell was clearly looking to cut rates 50 b.p. at the July meeting. Doing so, in his view, would offset a confidence shock and manage the risks to the outlook. We will receive more data between now and the July 31 policy decision. Those data could mean the chair is not able to sway enough of the committee to a cut. But if Powell remains strongly inclined to cut, the FOMC is likely to show some deference. In light of the strong data, however, a negotiated 25 b.p. cut could be the compromise that emerges.Deutsche Bank AG25 basis point cut in July50 basis points of cuts in rest of 2019Chair Powell’s testimony and the minutes to the June FOMC meeting largely confirmed the Fed’s intention to ease monetary policy at their July 31 meeting. While we continue to expect the Fed to cut 75 bps by year end, we remain of the view that the Fed will ease 25 bps in July, and proceed on a meeting-by-meeting basis as they evaluate the incoming growth and inflation data.(Adds forecast from Deutsche Bank.)To contact the reporters on this story: Simon Kennedy in London at firstname.lastname@example.org;Reade Pickert in Washington at email@example.comTo contact the editors responsible for this story: Stephanie Flanders at firstname.lastname@example.org, Alister BullFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Deutsche Bank is cutting 18,000 jobs and shuttering its equity sales and trading business worldwide as part of a massive restructuring after years of struggling with profitability, but Werner Steinmueller sees opportunity in the upheaval.The bank's Asia-Pacific chief executive said the capital released by closing the equity trading operations will allow the company to reinvest in its Asian business, expand its corporate bank in parts of the region and add jobs in its wealth management business " its fastest growing business in Asia.Steinmueller declined to discuss how many people will lose their jobs in Asia as a result of the overhaul, but said the effect of withdrawing from the equity business in the region will be "minimal".The company employed 19,732 people at the end of 2018 in the Asia-Pacific region, with about two thirds working in back office and support functions in India and the Philippines that serve the business globally. Following the restructuring, Deutsche Bank will employ about 74,000 people worldwide in 2022."I'm getting more investments," Steinmueller told the South China Morning Post. "Number one [is] in the corporate bank. We already started, but with the new strategy, we are accelerating investments in China and Australia for example, as well as in technology. We want to expand our range of transaction banking services in Australia, such as cash management." Deutsche Bank revamp to cost US$8.3 billion and 18,000 jobsSewing is the bank's fourth person to hold the CEO title in the past five years as the bank has been hit with years of losses and repeated debate over its direction. The troubled bank reported its first full-year profit since 2014 last year, but has struggled to achieve the level of returns of its American rivals.Before the latest restructuring effort, Deutsche Bank considered a merger with German rival, Commerzbank, but that proved to be unpopular with shareholders and merger talks ultimately fell apart in April.Sewing described the latest overhaul as a "fundamental rebuilding" of the bank and a return to its roots."This is a rebuilding which, in a way, also takes us back to our roots. We are creating a bank that will be more profitable, leaner, more innovative and more resilient," Sewing said in a message to employers posted on the bank's website. "It is about once again putting the needs of our clients at the centre of what we do " and finally delivering returns for our shareholders again."Deutsche Bank has declined to provide a regional breakdown of the potential job losses, but the bulk of cuts from the closure of equity trading business are expected in New York and London, where the company has larger trading operations.As part of that effort, the company said it would create a new division that combines its global transaction bank and its German commercial banking business, known as the corporate bank."Cutting back volatile, capital-intensive and underperforming sales and trading activities, and further reducing the cost base should improve profitability and strengthen leverage, but execution risks are high," Fitch Ratings said in a note. "The outlook is evolving, indicating that the rating could move in either direction over a one-to-two-year horizon."Fitch said the bank could see its BBB rating upgraded if it makes significant progress in refocusing on activities with a better risk-return profile and capital usage and sees stronger returns from its core commercial banking, private banking, asset management and smaller investment banking businesses." Laid-off expat bankers struggle to find new jobs in Hong KongSteinmueller said Deutsche Bank is "performing well" in Asia and intends to allocate resources to markets and business lines where it is strong, including making a bet on the future potential of the Asian market."Asia Pacific is a market for investment for the bank," Steinmueller said. "The APAC franchise has a good performance. In nearly all products, we had revenue increases and profitability in the first quarter. In fact, it was a record result for many years. So we are a growth area and getting the investments."Steinmueller said that the corporate banking business and fixed income have been key revenue drivers for the bank and it is seeing close to a double-digit growth rate in its wealth management business.The investment will come in the form of technology investments and expansion in new markets, such as Australia where Deutsche Bank has a minimal corporate banking operation and sees the potential for expansion, Steinmueller said."Coming to the investments, it is going, of course, in fixed income. Our strength is undoubtedly on the lending side, structured lending, global credit, and distressed loans," Steinmueller said. "On the transaction banking side, we are investing in people and markets, such as to serve our multinational clients on the subsidiary side, which today, we are not able to do. [We are making] people investments on the wealth management side. This is key in order to continue to grow this business." Trade war to boost German firms in China, says Deutsche Bank's Asia chiefSteinmueller said that China and India are very important markets for the bank going forward."We want to grow substantially our China business, so about 10 per cent of revenue growth every year. Onshore, we are fully licensed. We have a full product range. In transaction banking, where we are very strong in China, with both inbound and outbound business," Steinmueller said, "it means that we are dealing with both multinational clients with operations in China, and large Chinese corporates wanting to expand offshore."Deutsche Bank acted as a financial adviser on Ant Financial's US$14 billion private placement in June 2018, advised BMW on taking a 75 per cent stake in its joint venture in October and was a sponsor on Tencent Music Entertainment Group's US$1.1 billion initial public offering in the US in December.Steinmueller said that 88 of the company's top 100 clients, including European and American companies, use Deutsche Bank in the region."We make 70 per cent of our revenues outside of Germany and Asia plays a key role there," he said.Steinmueller said the company is closely watching the opening up of the financial services industry in China, including the potential to take 100 per cent stakes in joint ventures in the next few years."We are following this development very carefully," he said. "If we can do it and it fits in our business model, we will consider this option."This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2019 South China Morning Post Publishers Ltd. All rights reserved. Copyright (c) 2019. South China Morning Post Publishers Ltd. All rights reserved.
a week ago, there was a lot of big news to grasp: the 18,000 job cuts, the closure of the equities business, a seesawing share price as investors first welcomed the new strategy — then appeared to spot holes in it. One element has got relatively little attention, though: the regulatory dispensation granted Deutsche to lower its equity capital ratio for a period.
This weekend's Barron's presents the 2019 Midyear Roundtable commentary and stock picks. Specific roundtable picks include a leading dollar store operator and the inventor of graphics processing units. ...
The giant bank can no longer make money executing stock trades for professional money managers. It’s a sign the business of Wall Street has changed. So who wins in the aftermath?
LONDON/HONG KONG (Reuters) - Deutsche Bank is focusing its equity capital markets (ECM) business such as initial public offerings (IPOs) on Germany and Europe, scaling back in the United States and retreating from most of Asia, banking sources said. Germany's largest lender said on July 7 it would retain a "focused" ECM franchise as well as U.S. and European equity research teams as part of a 7.4 billion euro ($8.3 billion) shake-up which all but ends its ambitions on Wall Street.
(Bloomberg) -- Deutsche Bank AG settled a lawsuit from a Dutch affordable-housing provider that said the lender was responsible for bribery over derivatives trades, bringing an end to a long-running and at times colorful trial that was just entering its final stage.The bank paid 175 million euros ($197 million) to settle the case with no admission of liability, it said Friday in a statement. The deal ends a court battle that had featured testimony from a middleman who’s confessed to bribery, and tales of expensive sushi, “bubbly” wine, an exclusive nightclub favored by British royals, and meals at a Michelin-starred restaurant.In the London suit, Stichting Vestia -- a housing provider that nearly collapsed as a result of derivatives losses totaling more than 2 billion euros -- sought 840 million euros in damages in a bid to recoup some of those losses.It said some derivatives transactions with Deutsche Bank were “flawed” because the bank paid fees to a middleman when it entered into trades with the housing group. The bank said during the trial that the middleman seemed to be a legitimate intermediary, and it denied Vestia’s allegations.“With this settlement agreement, this dispute between Vestia and Deutsche Bank comes to an end,” Deutsche Bank said in a statement.“We are satisfied with the result,” Vestia said in a statement. The $197 million sum “is a substantial amount and makes a good contribution to the financial recovery.”The case is just one of a lengthy list of legal issues that Deutsche Bank is grappling with. The U.S. Department of Justice is investigating the bank as part of a broadened probe of Malaysia’s scandal-plagued 1MDB investment fund.The Vestia trial started in early May and had been scheduled to last until July 18. The settlement deal was struck as closing arguments in the trial were due to be heard.The trial had shed light on how the lender entertained clients. Bankers took a Vestia official to Michelin-starred restaurants and to Boujis, an exclusive London nightclub, where a group drank bottles of vodka and Dom Perignon champagne, according to the housing group’s filings. That club is popular with younger members of the British royal family, “some of whom have made the transition to responsible parenthood,” Vestia’s lawyer Rhodri Davies said during the case.(Updates with details from trial, from third paragraph.)To contact the reporter on this story: Kaye Wiggins in London at email@example.comTo contact the editors responsible for this story: Anthony Aarons at firstname.lastname@example.org, Christopher Elser, Joost AkkermansFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Dutch housing cooperation Vestia said on Friday Deutsche Bank would pay it 175 million euros ($197 million) to settle claims the German bank had improperly sold it interest rate derivatives. In a statement on its website, Vestia said it would cancel the suit it had been pursuing against Deutsche Bank at the High Court of Justice in London. Vestia nearly went bankrupt in 2012 after suffering 2 billion euros in losses on derivatives it had purchased from ABN Amro, Deutsche Bank and other major investment banks as a hedge against rising interest rates.
On July 8, Deutsche Bank began laying off 18,000 workers across its international offices as it retreats from the equities business, reducing the size of its workforce by roughly a fifth. Last year alone, Verizon Wireless laid off 44,000 workers, while Toys R Us shed 30,000. Wells Fargo let go of 26,500 over the course of three years, and General Motors laid off 14,700.
The bank’s unusual locus in the place where “Big Bang” happened speaks of a drift away from the old City as the geographic centre of London’s financial services industry. Its retreat from the business model that underpinned that sudden deregulation of financial markets in the 1980s, is likewise a sign of the decline of equities as a capital markets business.
Deutsche Bank has agreed to pay €175m to settle a lawsuit from a Dutch housing association, which claimed its treasurer was bribed with cash and lavish perks into buying ruinous derivatives. Vestia, a social landlord which rents out 60,000 flats to low-income tenants, had sued Deutsche for €840m in damages over interest rate derivatives that triggered huge margin calls in the 2011 Eurozone crisis. The derivatives bought from Deutsche and other lenders brought it close to collapse.
(Bloomberg Opinion) -- An age-old question has reared its head again: Why can’t China create a globally competitive investment bank in the mold of Goldman Sachs Group Inc. or Morgan Stanley?It’s not like the country hasn’t tried. China International Capital Corp., a venture formed in 1995 with New York-based Morgan Stanley, foundered amid disputes between the local and U.S. partners and slipped behind newer rivals without ever becoming a global heavyweight.(1) Citic Securities Co. made an unsuccessful attempt to buy into Bear Stearns Cos. in 2007 (which was probably a lucky escape). Now add CLSA Ltd. to the list of failures.A common theme running through the exodus of foreign executives from Citic’s CLSA, detailed by Cathy Chan of Bloomberg News this week, and the earlier strains at CICC is the clash of cultures between Wall Street’s freewheeling practices and the more staid, hierarchical approach of Chinese state-controlled financial institutions. U.S. investment banks are highly competitive and individualistic, studded with rainmakers, big-hitting traders and star analysts who may earn vast pay packages and hold power that’s disproportionate to their place in the management structure. It’s a way of working that doesn’t gel easily with China’s top-down state industrial model.When one senior CLSA executive had concerns about the direction of his unit, “colleagues from Citic advised him to steer clear of conversations with the boss that didn’t involve flattery,” Chan wrote. Compare that with this profile of CICC from 2005: “Morgan Stanley's Western bankers were used to disagreeing openly with colleagues. CICC's Chinese employees preferred to resolve differences without confrontation, and in private.” Not much seems to have changed.These tensions took a toll on CLSA, a Hong Kong-based outfit with a reputation for independent-minded research that was acquired in 2013 by Citic Securities. The Chinese brokerage is an arm of Citic Group, a state-owned pioneer of the country’s economic reforms set up under the direction of Deng Xiaoping in the late 1970s. Before the takeover, CLSA was ranked in the top three for Asian research by institutional investors, along with Morgan Stanley and Deutsche Bank AG. By last year, it had dropped out of the top six, according to Greenwich Associates.As a group, Chinese investment banks and securities firms have failed to make much impact on international markets. The combined overseas revenue of the country’s 11 largest brokerages was just $3.5 billion last year, according to Bloomberg Intelligence analyst Sharnie Wong. That’s roughly on a par with the Asian revenue of BNP Paribas SA, which doesn’t rank among the biggest global investment banks. Chinese brokerages are relatively unsophisticated beside their Wall Street rivals, focusing mostly on equities trading – a business that Deutsche Bank AG said this week it’s exiting amid increased automation and low margins. Mainland firms have less of a presence in bond trading and structured products, which remain driven by humans and are the bread and butter of international banks. It could be argued that China doesn’t need a world-class investment bank, given the dominance of local firms in its increasingly important domestic market. The inclusion of the country’s shares in the MSCI Emerging Markets Index and its bonds in the Bloomberg Barclays index has driven billions of dollars of foreign money into Chinese capital markets. Chinese firms have also made headway in IPO underwriting in Hong Kong, dislodging Wall Street rivals in the league tables.Besides, global investment banking revenues have been sliding since the financial crisis, amid low interest rates and the trend toward automated trading. That would be a short-sighted view, though. If China is serious about modernizing its capital markets, it needs the expertise developed by leading international investment banks to provide better fundraising options for its companies. It may be no coincidence that Beijing has finally relented and allowed overseas banks to control their Chinese ventures, among them UBS Group AG, Nomura Holdings Inc., JPMorgan Chase & Co., Morgan Stanley and Credit Suisse Group AG. A slowing economy means efficient allocation of capital has become more more important than ever. Exposing local brokerages to overseas competition may spur them to raise their game.Chinese firms operating in Hong Kong are already moving up the curve in research as they try to make their way in the city’s more robust environment. An example is CGS-CIMB Securities, a venture between China Galaxy Securities Co. and Malaysia’s CIMB Group Holdings Bhd.A world-class investment banking operation needs more than research, though. Much of the competitive advantage for bulge-bracket firms derives from networks of relationships with companies and investors that have been cultivated over decades. Building such capabilities will take time.It’s hard to see this happening until China stops using financial firms as tools of the state. In 2015, the government leaned on brokerages to rescue a crashing stock market. Last month, it asked large securities firms to take over the role of providing financing to small and medium-size enterprises. If China is to produce its own Goldman Sachs, it’s unlikely to come from the sclerotic state economy. Look instead to the wellspring of Chinese innovation: the private sector. For that to happen, though, the state has to get out of the way.Ultimately, the biggest block to Beijing’s ambitions is Beijing itself. (Updates the eighth paragraph with Chinese firms dislodging rivals in Hong Kong IPO underwriting. An earlier version of this column corrected the spelling of Bear Stearns in the second paragraph.)(1) Morgan Stanley sold its CICC stake in 2010.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.
Deutsche Bank AG plans to lay off 126 employees in New York in the coming months, according to a filing the bank made with New York state that was made public on Thursday. The 126 employees are being let go for economic reasons and their final day will be between Aug. 7 and Aug. 21, according to a Worker Adjustment and Retraining Notification that the bank filed with the New York State Department of Labor on July 8. Deutsche Bank on Monday announced plans to cut 18,000 jobs worldwide, as part of a 7.4 billion euro ($8.3 billion)restructuring Chief Executive Christian Sewing hopes will turn around the bank, whose shares hit a record low last month.
The chief executive of (DBK) has reprimanded the senior members of staff at the ailing German lender who invited tailors into the London headquarters to get fitted for suits on the same day thousands of other staff members were being laid off. Financial News revealed on Tuesday that on the same morning Deutsche began making thousands of job cuts as part of a sweeping overhaul at the bank, some managing directors at the company were being fitted for suits costing at least $1,800. The incident came to light after two tailors were photographed leaving Deutsche’s London headquarters on Monday holding suit bags.
(Bloomberg) -- The U.S. Department of Justice is investigating Deutsche Bank AG as part of a broadened probe of Malaysia’s scandal-plagued 1MDB investment fund, according to a person with knowledge of the matter.Investigators, who have spent years examining Goldman Sachs Group Inc.’s lucrative dealings with the fund, are now taking a closer look at a former Goldman executive who later worked at the German bank, said the person, who asked not to be identified discussing the confidential inquiry. U.S. authorities haven’t accused Deutsche Bank or the former employee of wrongdoing.The inquiry aims to determine whether Deutsche Bank might have violated foreign-corruption or anti-money-laundering laws as it helped 1MDB raise $1.2 billion in 2014, the Wall Street Journal said in an earlier report Wednesday. Tim Leissner, another ex-Goldman executive who pleaded guilty last year for his role in the scandal, has been helping with the Deutsche Bank examination, the paper said, citing unidentified people with knowledge of the matter.Tan Boon-Kee is a former Goldman Sachs banker who later worked at Deutsche Bank as Asia Pacific head of the financial institutions group. The Journal identified her as the banker being looked at by the Justice Department. Tan, who left Deutsche Bank last year, was interviewed by Singapore authorities in connection with 1MDB, people with knowledge of the matter said last year. She hasn’t been contacted by the Justice Department for more than a year, a person with knowledge of her situation said. Tan, now at Hong Kong-based insurer FWD Group Ltd., declined to comment.“Deutsche Bank has cooperated fully with all regulatory and law enforcement agencies that have made inquiries relating to 1MDB,” the Frankfurt-based company said in an emailed statement. It pointed to asset-forfeiture documents previously filed by the Justice Department indicating 1MDB misled Deutsche Bank during transactions. “This is consistent with the bank’s own findings in this matter,” the firm said in the statement.Justice Department spokesman Peter Carr declined to comment.Probes into 1MDB have mainly focused on more than $6 billion the fund raised in 2012 and 2013 with help from Goldman Sachs, which reaped almost $600 million in fees. The New York-based bank, which has said it’s cooperating with related investigations, has portrayed Leissner as a rogue employee who circumvented its internal controls. The Justice Department now expects to start negotiating with Goldman Sachs soon to potentially resolve a criminal probe, the Journal wrote.“We do anticipate getting into active discussions with Goldman, at this point, in the near future,” it cited Assistant Attorney General Brian Benczkowski as saying in an interview. He declined to comment on other aspects of the 1MDB case.Overhaul EffortThe investigation of Deutsche Bank is emerging just as the lender makes its most dramatic effort yet to overhaul its business after a decade in which it paid more than $18 billion in fines and other legal costs.In recent years, regulators and prosecutors have raided the bank’s headquarters, subpoenaed documents and grilled executives in dozens of probes on three continents. This week, the company said it will cut a fifth of its 91,000-person workforce and exit some business lines as it seeks to improve profitability.Leissner, Goldman’s former head of Southeast Asia, pleaded guilty last year to U.S. charges that he conspired to launder money and violated the Foreign Corrupt Practices Act. As part of the deal, he agreed to forfeit $43.7 million and admitted to bribing officials in Malaysia and the United Arab Emirates to get bond deals for Goldman Sachs.(Updates with details on Tan Boon-Kee in fourth paragraph)\--With assistance from Peter Blumberg, Edvard Pettersson and Tom Schoenberg.To contact the reporters on this story: Sonali Basak in New York at email@example.com;John Gittelsohn in Los Angeles at firstname.lastname@example.orgTo contact the editors responsible for this story: Michael J. Moore at email@example.com, David Scheer, Alan GoldsteinFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
BHP Group is exploring options for its thermal coal business including a disposal amid a growing investor focus on environmental, social and governance issues. Big miners are facing increased pressure from institutional investors concerned about global warming to exit coal or cap production. Norway has just announced plans to tighten restrictions on coal investments for its $1tn sovereign wealth fund, targeting producers including BHP as well as Glencore and Anglo American.
Sam Woods, the head of the BoE’s Prudential Regulation Authority said on Thursday that the restructuring has prompted scrutiny by UK supervisors, who are in close contact with not just Deutsche, but also Germany’s markets regulator, BaFin, and the European Central Bank, which oversees the lender’s safety and soundness. “It seemed to many people, including management of the firm, that they needed to take a pretty significant step in order to move the firm on to a stronger footing, so we welcome the fact that they have set out a pretty ambitious plan,” Mr Woods said. Whole teams of traders were axed across Asia, London and New York on Monday as Deutsche revealed plans to shut its equity-trading business and shrink its bond and rates-trading operations significantly.
(Bloomberg) -- Deutsche Bank AG chief Christian Sewing had barely finished relaying the news about his huge restructuring to investors and the bank’s embattled employees when a fresh set of reputational woes surfaced.The U.S. Department of Justice is investigating Deutsche Bank as part of a broadened probe of Malaysia’s scandal-plagued 1MDB investment fund, a person with knowledge of the matter said. While authorities haven’t accused Deutsche Bank of wrongdoing, it’s an unwelcome development for Sewing, who has said that the firm has stabilized and that it’s past the bulk of its legal issues. In another blow to the bank’s image, it was revealed that Jeffrey Epstein had been a recent client of Deutsche Bank. The lender is said to have severed business ties with the financier earlier this year, just as U.S. authorities were preparing to charge him with operating a sex-trafficking ring of underage girls.Deutsche Bank has faced almost $18.3 billion in fines and legal settlements since the start of 2008. That’s the biggest bill for any European bank after Royal Bank of Scotland Group Plc’s $18.5 billion, according to calculations by Bloomberg. The German bank still has another 1.1 billion euros ($1.24 billion) set aside for future disputes and penalties.Here’s a look at some of the probes Deutsche Bank still faces, according to its latest filings and people familiar with the matter. The German lender says it’s cooperating with authorities on all of these issues.1MDBDoJ investigators, who have spent years examining Goldman Sachs Group Inc.’s lucrative dealings with the fund, are now taking a closer look at a former Goldman executive who later worked at Deutsche Bank, said the person familiar with the matter, who asked not to be identified discussing the confidential inquiry. The inquiry aims to determine whether Deutsche Bank might have violated foreign-corruption or anti-money-laundering laws as it helped 1MDB raise $1.2 billion in 2014, according to the Wall Street Journal. The German bank pointed to asset-forfeiture documents previously filed by the DoJ indicating that 1MDB misled Deutsche Bank during transactions.Danske Bank A/SThe German bank has said several authorities have asked it for information in what has become one of the world’s biggest money laundering scandals -- questionable funds at the Estonian arm of Denmark’s Danske Bank. But in a sign that Deutsche Bank doesn’t expect a penalty for how it may have handled any funds, it says it hasn’t established a financial provision or even a contingent liability for the matter.Panama PapersA high-profile raid last year embarrassed Sewing as media broadcast images of police cars outside the bank’s twin skyscrapers. Frankfurt prosecutors are probing whether Deutsche Bank helped set up offshore companies in tax havens and failed to report suspicions that money could have been obtained illegally. Deutsche Bank has said that it found no indication of misconduct by staff, and doesn’t list the matter in the legal risks section of its annual report.Sovereign BondsDid Deutsche Bank manipulate markets for sovereign, supranational and agency bonds? The bank says it has received inquiries from regulatory and law enforcement authorities and that it faces civil litigation. It recorded a provision after agreeing to one settlement, but hasn’t disclosed whether it has money set aside or contingent liabilities for others.U.S. TreasuriesWas there misconduct in the way Deutsche Bank handled auctions, trading and market activity related to Treasuries? The bank says it has received inquiries from regulatory and law enforcement authorities. Deutsche Bank hasn’t disclosed whether it has established a provision or a contingent liability.Mirror TradesIn 2012-14, Deutsche Bank’s money-laundering controls failed when clients moved billions of dollars out of Russia using equity trades in Moscow and London that offset one another. The DoJ and other authorities are looking into the matter. The bank has already paid about $670 million in fines to other agencies and has recorded a provision for the remaining investigation.Hiring PracticesDid Deutsche Bank comply with U.S. law when hiring staff referred by clients, potential clients and government officials, potentially to win business? The DoJ and Securities and Exchange Commission are among authorities that are taking an interest, according to the bank, which says it has recorded a provision for some of the investigations. JPMorgan Chase & Co. has paid a fine to resolve similar inquiries.Currency TradingDid Deutsche Bank manipulate foreign exchange markets? The company has already paid more than $340 million in fines to authorities and says it continues to face investigations by regulatory agencies. The bank wasn’t part of group settlements with regulators and its fines were lower than those of several other banks. Deutsche Bank also faces civil litigation, but hasn’t disclosed whether it has money set aside for these matters.Libor (and Euribor and Tibor)Is there even more damage to come from rigging-scandal-plagued benchmark lending rates? Deutsche Bank has already paid more than $3.5 billion in fines to other authorities, including the largest settlement by any bank so far in the matter. It says it continues to face investigations by regulatory agencies, but hasn’t disclosed whether it has made provisions. Deutsche Bank also faces civil litigation.U.S. Mortgage BondsEven after a $7.2 billion settlement with the DoJ in 2017, Deutsche Bank has yet to conclude its role in the industrywide probes on bonds blamed for exacerbating the financial crisis. The lender says it has received subpoenas and requests for information from regulators and government entities. The bank has recorded provisions for some of the investigations. The bank also faces civil litigation and has set aside money for some of the cases.(Updates with Epstein reference in second paragraph.)To contact the reporter on this story: Nicholas Comfort in Frankfurt at firstname.lastname@example.orgTo contact the editors responsible for this story: Dale Crofts at email@example.com, Keith CampbellFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Job cuts and restructuring announced by Deutsche Bank AG this week risk making it harder for the German lender to claw back market share at its surviving Asian units.Over the past five years, Deutsche Bank has fallen down the rankings for Asian debt capital markets and wealth management, while it has lost the top spot to rivals in fixed-income, currencies and commodities trading. Despite these slips, the businesses contributed to a record profit for the firm in the first quarter of 2019. But retrenchments in equities, research and investment banking could make it hard to maintain that performance.“If I’m with Deutsche Bank and I’m a good performer, if I get an offer from some other firm that can better support my work with research, a global franchise, stronger flow of investment banking deals, I will probably go there,” said Sanjay Jain, head of financials at Aletheia Capital Ltd., one of Asia’s biggest independent investment-research firms.The risk is that an exodus of Asian employees would break crucial business links and test the firm’s resolve to stay “absolutely committed” to the region. Even before this week’s cull, several senior credit traders had left Deutsche Bank last year for regional competitors such as Standard Chartered Plc.Deutsche Bank saw its wealth management assets in Asia outside of China fall 4.6% in 2018 from the previous year, even though it boosted the number of relationship managers by 12%, data from Asian Private Banker show.Assets under management at the bank’s wealth business in emerging markets, including Asia, rose 10% in the first quarter of 2019 from a year earlier, a Deutsche Bank spokeswoman said by email. Revenue grew by double digits last year at businesses including the private banking unit, as well as Deutsche Bank’s key markets of China and India, she said.Deutsche Bank is also facing stiffer competition from Chinese and Indian brokerages in capital markets that value knowledge of local languages and customs, and have entrenched ties with the nations’ state-run or family-owned businesses.Its pullback from Asian equities means it could lose market share to Chinese rivals, said Sharnie Wong, an analyst at Bloomberg Intelligence. Stock coverage is vital, due to growing inclusion of Chinese shares in global indexes.“Any impact from the recent changes in the investment bank is expected to be largely manageable, partly because the areas that provide the kind of services our clients use will be relatively less affected,” Deutsche Bank said.The firm cannot be complacent about debt capital markets either. Deutsche Bank ranked third for underwriting of Asia ex-Japan bonds denominated in dollars, euro and yen as recently as 2015. But it’s currently in ninth place this year, and was No. 11 in 2018. To be sure, the bank’s ranking in the high-yield G3 currency bond underwriting league tables is higher: third so far in 2019, up from eighth in the whole of last year.Deutsche Bank expects growth across all areas of fixed-income and currencies, the spokeswoman said, pointing to top or improving rankings in certain sub-sections of the market such as global credit trading or the Euromoney FX survey. Deutsche Bank had a record first quarter, Werner Steinmueller, APAC chief executive officer, said on Monday. He was referring to profit, the bank representative clarified on Thursday.The firm may look to use its relative strength in fixed-income and currencies trading to cater to multinationals’ needs for transactions and cash management, Bloomberg Opinion’s Nisha Gopalan wrote on Monday. While it lost the No. 1 ranking, Deutsche Bank is still among the top three in the Asian market, according to data from Coalition Group.China will continue to raise money and Deutsche Bank can feed these deals into its global network “in a way that can’t be matched by local Chinese competitors,” said Brock Silvers, managing director at China-based fund Kaiyuan Capital. “The cutbacks in the Asian equities business may hamper these efforts, but won’t stop them.”(Updates with Deutsche Bank wealth assets in sixth paragraph.)To contact the reporters on this story: Alfred Liu in Hong Kong at firstname.lastname@example.org;Denise Wee in Hong Kong at email@example.comTo contact the editors responsible for this story: Sam Mamudi at firstname.lastname@example.org, Jeanette Rodrigues, Katrina NicholasFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
A multi-billion-dollar fraud scandal perpetrated by a once-high flying and influential investment arm of the Malaysian government appears to ensnare another major global financial institution - Deutsche Bank.