|Bid||6.88 x 555100|
|Ask||0.00 x 230000|
|Day's Range||6.75 - 6.91|
|52 Week Range||5.78 - 9.03|
|Beta (3Y Monthly)||1.61|
|PE Ratio (TTM)||N/A|
|Earnings Date||Jan 30, 2020|
|Forward Dividend & Yield||0.11 (1.56%)|
|1y Target Est||N/A|
(Bloomberg) -- Deutsche Bank AG told U.K. regulators that it’s facing persistent issues in processing high-value payments in the country, a further sign of the IT problems plaguing the lender.The German lender met with Bank of England officials two weeks ago to explain disruptions of payments going through the BoE’s high-value payments system CHAPS on several days in October, according to a person familiar with the matter. The bank has also discussed the issue with Megan Butler, head of supervision at the Financial Conduct Authority, according to the Financial Times, which first reported the news.As a result of Deutsche Bank’s problems, about 21,000 payments for online retailer Amazon.com Inc. were delayed in recent months, the person said, asking not to be identified discussing the private information.Deutsche Bank has long struggled to replace an aging IT infrastructure. Chief Executive Officer Christian Sewing last year appointed a new chief operating officer, Frank Kuhnke, to lead the drive and recently hired Bernd Leukert, formerly a senior executive at German software company SAP SE, as head of technology and innovation.Payments services is a core offering of Deutsche Bank’s transaction bank, which Sewing recently took out of the investment bank and turned into a standalone division now known as corporate bank. He has called the division the “DNA” of the bank and made it a centerpiece of his turnaround plan unveiled in July.“We continue to invest substantially in our IT and platform capabilities,” a Deutsche Bank spokesman said in an emailed statement. “We put mitigating steps in place to ensure that similar issues cannot re-occur.”CHAPS has 34 direct participants and processed 4.3 millions payments worth 7.5 trillion pounds ($9.6 trillion) last month, according to its website.To contact the reporter on this story: Steven Arons in Frankfurt at email@example.comTo contact the editors responsible for this story: Dale Crofts at firstname.lastname@example.org, Christian BaumgaertelFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg Opinion) -- On Friday, judges in Milan convicted executives from the world’s oldest bank, Banca Monte dei Paschi di Siena SpA, for falsifying its accounts in collusion with Deutsche Bank AG and Nomura Holdings Inc. Some 11 years after the misdeeds, it’s hard to have complete faith in the ability of regulators to prevent similar bad behavior.That executives have been held accountable for one of Europe’s biggest banking scandals will be some comfort to savers and taxpayers. Deutsche and Nomura face financial penalties of $175 million (Paschi has already settled). Michele Faissola, Sadeq Sayeed and Giuseppe Mussari — formerly of Deutsche, Nomura and Paschi — were among 13 executives sentenced to jail, the most senior bankers convicted of crisis-era chicanery. Nomura is considering an appeal, while Deutsche will review the court’s ruling.Regulators don’t have much to take credit for here in reining in the excesses of these lenders. After hiding hundreds of millions of dollars in losses in 2008 and 2009, Paschi went on to build a mountain of bad loans that led to multiple taxpayer rescues. Deutsche, meanwhile, has only just embarked on a serious plan to restore profitability after myriad fines for dubious practices.The complex Deutsche derivatives trade at the center of the Milan trial was certainly ingenious. Dubbed Santorini, it made a loss disappear on a previous deal that would have blown a big hole in Paschi’s 2008 results. To do this, Deutsche made one bet on interest rates with Paschi that it would almost certainly lose and another wager that it would win. While Deutsche paid out immediately on the bet that Paschi won, the German bank let the Italian bank pay out on the wager that it lost over several years. That allowed Paschi to window-dress its accounts and hide the previous loss.The outside world would be none the wiser for years, until I came across documents that helped recreate the concoction. Within days of my article being published in January 2013, a similar deal emerged between Paschi and Nomura; Paschi said it would restate its accounts. The derivative dressed up as a loan was so successful for Deutsche it repeated the trade with clients around the world. The German bank also ended up correcting its figures.Given the widespread nature of the gimmickry, it’s reasonable to ask where the regulators were in all this. The simple answer: asleep at the wheel. For years (and well before my reporting) financial supervisors from New York to Rome were aware of how far these banks were pushing the envelope.As early as 2010, Italy’s central bank, then headed by former European Central Bank president Mario Draghi, had discovered that Paschi had been masking losses. The Bank of Italy said in a 2010 report that it didn’t have “powers as regards accounting” and that the matter needed further study.There was no great rush. The same Paschi managers remained in place through 2012. In the meantime, the bank’s bad loans were piling up as local political interference and reckless lending led it to overlook credit risk. Bailout followed bailout as losses mounted.As recently as 2016, Paschi was probably insolvent and its financial controls were still deemed perilously weak. That didn’t stop the ECB in 2017 nodding through the lender’s third helping of state aid in less than a decade. Over and over, supervisors failed to pick up on practices detrimental to Paschi’s longer-term viability.Deutsche’s rehabilitation has been torturous too. It wasn’t until 2015, well after the bank had been embroiled in multiple scandals — from rigging benchmarks to laundering dirty Russian money — that regulators sought to tame its risk-taking ethos. Under former chief executive officers Anshu Jain and his predecessor Josef Ackermann, Deutsche Bank had become a factory of risky and complex trades from its London hub as it sought to compete head on with Wall Street. Only now, under chief executive officer Christian Sewing, is the German giant attempting a deep reboot of the business by shrinking its trading unit. Unfortunately the ambitious reorganization has coincided with an economic slump.Of course, there are many obstacles that regulators will point to that complicate their roles, not least the need to tread carefully to maintain financial stability — especially at a systemically critical lender such as Deutsche.But by failing to place sufficient pressure at the right time, regulators have allowed the banks they oversee to delay the inevitable: These companies need to find other ways to make money. European bank valuations are close to the level they were in the 1980s; confidence in the industry is fragile.There is some optimism that the shift of bank regulation from the national level to the European level, via the ECB, will strengthen supervision. The deepening of a euro zone banking union with a common deposit insurance scheme, championed last week by Germany’s finance minister Olaf Scholz, would further erode national meddling.Unfortunately the ECB’s early record as a watchdog has been mixed. Draghi’s successor Christine Lagarde has pledged to keep banks safe. She also needs to keep them honest.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.
(Bloomberg Opinion) -- European fund management companies spent 2018 watching their share prices steadily decline, battered by increased regulatory scrutiny, customers withdrawing money and the relentless squeezing of fees. They’ve rallied this year, but the industry’s biggest beast in the region is outpacing its peers by an astonishing margin.Investors in Amundi SA have enjoyed a total return of more than 60% in 2019, outpacing the Stoxx Europe 600 index by 35 percentage points. The stock has beaten the 32% gains at DWS Group GmbH and Standard Life Aberdeen Plc, the 39% return for Schroders Plc and Man Group Plc’s 19% rise.Amundi, 68 percent-owned by France’s Credit Agricole SA, recently announced record quarterly inflows of almost 43 billion euros ($48 billion) in the three months through September, breaking a streak of three consecutive quarters of client withdrawals. Its 1.6 trillion euros of assets under management — up from 952 billion euros when it listed on the stock market in November 2015 — make it Europe’s biggest money manager.The most impressive statistic, however, is the one element of Amundi’s financials over which it has most control: its costs.The company’s frugality has nudged its cost-to-income ratio lower in recent years; it fell to an industry-beating 51.1% at the end of the third quarter. By comparison, Deutsche Bank AG-controlled DWS aims to cut its ratio to 65% and doesn’t expect to achieve that until the end of 2021.What could knock Amundi off its perch? Well, DWS Chief Executive Officer Asoka Woehrmann told the Financial Times this month that he plans to challenge his rival’s dominance by finding a takeover or merger that would increase his firm’s 752 billion euros of assets. Earlier this year Switzerland’s UBS Group AG was reported to be considering strapping its fund management arm to DWS. Insurer Allianz SE was also said to be interested in the German investment firm. Any such deal would create a challenger with the scale to match Amundi.But the French fund giant’s CEO Yves Perrier is unlikely to just stand by if industry consolidation begins. Now that he’s finished absorbing Pioneer Investments, a fund management unit bought from Italy’s UniCredit SpA for 3.5 billion euros in 2017, the decks are clear. While these mega-mergers might not happen, Amundi is well placed if they do. With its shares trading at their highest in more than 18 months, Perrier has the currency to fund a deal.To contact the author of this story: Mark Gilbert 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.Mark Gilbert is a Bloomberg Opinion columnist covering asset management. He previously was the London bureau chief for Bloomberg News. He is also the author of "Complicit: How Greed and Collusion Made the Credit Crisis Unstoppable."For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Asoka Wöhrmann took on one of the investment industry’s most difficult roles last year when he was promoted chief executive of DWS, Germany’s largest asset manager. Nicolas Moreau, his predecessor, was brutally axed after two years in the role after DWS failed to meet ambitious performance targets agreed at the time of the company’s March 2018 initial public offering. The IPO followed a protracted period of instability that included several failed efforts by its parent, Deutsche Bank, to sell the €752bn asset management business, multiple reorganisations and the departure of numerous senior staff members.
Deutsche Bank has been forced to admit to regulators its role in the UK payment system still suffers serious problems, years after it was first placed in remediation, which has led to tens of thousands of transactions for clients such as Amazon being held up. Deutsche executives met Bank of England officials two weeks ago to explain the latest failings. The BoE demanded an explanation as to why the bank’s systems were disrupted on 10 per cent of business days in October, putting Deutsche among the least-reliable participants in CHAPS, the clearing house automated payment system, despite being in remediation over the matter for at least three years.
An Italian court has convicted 13 former bankers from Deutsche Bank, Nomura and Monte dei Paschi di Siena over derivative deals that prosecutors say helped the Tuscan bank hide losses in one of the country's biggest financial scandals. Monte dei Paschi reached a settlement with the court over the case in 2016 at a cost of 10.6 million euros.
Thirteen former bankers from Monte dei Paschi di Siena, Nomura and Deutsche Bank were sentenced to jail on Friday after a case that shook Italy’s establishment and fomented the rise of populism in the country. The sentences — among the harshest handed out to bankers convicted of financial crimes in living memory — were delivered in Milan after the men were found guilty of helping Monte dei Paschi hide hundreds of millions of euros in losses between 2008 and 2012, using complex derivatives contracts. The verdict, read by Milan judge Lorella Trovato, was delivered to a packed courtroom in a fascist-era courthouse, the site of high-profile mafia trials and former prime minister Silvio Berlusconi’s court cases.
Citigroup Inc and Deutsche Bank AG may cross-examine four antitrust investigators involved in a criminal cartel prosecution against them, an Australian court ruled on Friday, a win for the defence in a closely watched legal battle. Citi, Deutsche, ANZ and eight of their staff were charged last year with withholding crucial information from shareholders about the sale.
Commerzbank has warned it will miss its full-year profit target despite beating expectations in the third quarter, as economic weakness and ultra-low interest rates bite. Germany’s second-largest listed lender said on Thursday that full-year net profit would be lower than in 2018, downgrading previous guidance for a slight increase. The struggling bank is in the middle of a turnround plan after the collapse of merger talks with rival Deutsche Bank, and is selling its 69 per cent stake in Polish lender mBank to fund €1.6bn in restructuring costs.
(Bloomberg) -- Want the lowdown on European markets? In your inbox before the open, every day. Sign up here.Commerzbank AG downgraded its full-year profit outlook, marking a second retreat in weeks by Chief Executive Officer Martin Zielke after the European Central Bank took rates deeper into negative territory.The bank said net income for this year will now probably be lower than in 2018, down from the lender’s target of a slight increase, after the ECB cut the deposit rate to minus 0.5% and because of higher taxes. While the more pessimistic outlook comes after the lender abandoned its ambitions of increasing revenue this year, Commerzbank did join lenders including Societe Generale and UniCredit SpA boosting its capital buffers in the third quarter.European banks are struggling with the impact of negative rates on lending income and a worsening economic environment. German finance minister Olaf Scholz on Wednesday reopened the debate on consolidation as a potential solution to the continent’s banking ills with proposals to break the deadlock on banking union -- seen by many executives as necessary before deals can take place.Commerzbank shares gained as much as 2.6% in early Frankfurt trading, before paring gains to rise 1.1% as of 9:07 a.m.Several top investors and regulators have privately expressed skepticism about the latest turnaround plan, people familiar with the matter have said. In addition to promising to reduce the workforce by over 2,000, Zielke has also said he’s selling one of the company’s strongest profit engines, its Polish subsidiary mBank, while saying profitability will remain well below that of the competition for at least the next four years.“The further monetary policy easing announced by the European Central Bank in September and the resulting pressure on margins will have a negative impact on earnings,” Commerzbank said in its earnings statement, adding that it expects a “significantly higher tax rate in the fourth quarter.”The bank is grappling with strategy after talks to create a merger with German rival Deutsche Bank AG fell through earlier this year. Germany had been interested to create a large domestic-focused lender to ensure credit to its export-oriented economy during a downturn, but Deutsche Bank CEO Christian Sewing balked at the execution risks of a deal.Commerzbank last week released preliminary results for the third quarter showing net income jumped 35% in the period as risk provisions and other costs declined. The bank also sold a unit in the quarter, accounting for one-off revenue of 103 million euros ($114 million).Corporate ClientsThe corporate clients division, which has long been a particularly sore spot, continued to show a weak performance as revenue fell for a fifth consecutive quarter. The current division head Michael Reuther, will be succeeded in January by former ING Groep NV executive Roland Boekhout. The bank is also seeing more change in the board, with Chief Financial Officer Stephan Engels set to join Danske Bank A/S.Though the lender’s other core division, the one catering to retail clients, posted revenue growth, most of that came from the Polish subsidiary it’s now seeking to sell. By contrast, the German retail unit, which is the division’s biggest source of revenue by far, contracted 6%. The bank has said it’s shifting its focus from rapid client acquisition to getting existing clients to spend more money on banking services.As part of the September revamp, the lender also decided to scrap its previous promise -- and a major element of its previous marketing campaign -- to keep a network of about 1,000 branches in Germany. The retail division under Michael Mandel said it’s going to close about a fifth of those.(Adds failed merger talks with Deutsche Bank in sixth paragraph.)To contact the reporter on this story: Steven Arons in Frankfurt at email@example.comTo contact the editors responsible for this story: Dale Crofts at firstname.lastname@example.org, Ross LarsenFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg Opinion) -- Germany’s finance minister Olaf Scholz acknowledged this week that the European Union needs to make progress on cementing a banking union. The bloc’s growing reliance on American and British banks to underwrite the bulk of its capital markets activity, combined with the prospect of Brexit putting up barriers to European lenders accessing London-based capital, helps explain his new urgency.While domestic politics is playing a part in Scholz’s newfound warmth for the project (as my colleague Leonid Bershidsky argues here) and his insistence on important red lines may hinder progress (as Ferdinando Giugliano suggests here), he described his key motivation in an article for the Financial Times succinctly:Now that the U.K., home to London's capital markets, is on the verge of withdrawing from the bloc, we must make real progress. Being dependent for financial services on either the U.S. or China is not an option. So if Europe does not want to be pushed around on the international stage, it must move forward with key banking union projects, as well as the complementary project of capital markets union.Companies in Europe, the Middle East and Africa have raised more than $78 billion in equity offerings this year. In equity underwriting, Wall Street banks are becoming more dominant as Deutsche Bank AG and BNP Paribas SA, the EU-27’s biggest players in this field, cede market share.More than 40% of that underwriting business was led by JPMorgan Chase & Co., Morgan Stanley, Goldman Sachs Group Inc. and Citigroup Inc. Deutsche Bank’s market share has more than halved in three years.There’s a similar picture in the league tables for international bonds, where borrowers have raised more than $3.8 trillion this year. JPMorgan’s position as top lead underwriter in that category gives it a market share of almost 8% for the past three years, double that of Deutsche Bank. While BNP has increased its share to 4.4%, it remains well behind JPMorgan, Citi and Bank of America Corp. as well as London-based HSBC Holdings Plc and Barclays Plc.So Scholz is absolutely right to worry that the EU risks being starved of capital if its financial services industry continues to stumble from crisis to crisis and its markets remain fragmented. The plan earlier this year to create a national banking champion by merging Deutsche Bank with Commerzbank AG — a project endorsed by Scholz — was doomed to fail. But a cross-border European champion able to compete with Wall Street and the City of London is sorely needed.To contact the author of this story: Mark Gilbert 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.Mark Gilbert is a Bloomberg Opinion columnist covering asset management. He previously was the London bureau chief for Bloomberg News. He is also the author of "Complicit: How Greed and Collusion Made the Credit Crisis Unstoppable."For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
(Bloomberg) -- Want the lowdown on European markets? In your inbox before the open, every day. Sign up here.German Finance Minister Olaf Scholz sought to end an impasse in discussions over European banking integration by signaling Berlin may drop its opposition to a key part of the plan.“We cannot afford this deadlock any longer,” Scholz said in prepared remarks he was due to give at Bloomberg LP’s Future of Finance conference in Frankfurt. “It affects the functioning of our internal market. And it affects the trust of EU citizens in our ability to solve problems -- even those problems that we have fully acknowledged.”Berlin is ready to consider a form of joint European deposit insurance, something that would stabilize the financial system by reducing the risk of bank runs, according to a finance ministry paper published on Wednesday. That part of the plan has stalled, facing strong resistance from fiscally conservative countries and some parts of the German banking sector.The goal of a more closely-knit banking system in the euro area is to reduce the interdependence between lenders and their home countries. Breaking down national barriers could also facilitate deals to bolster Deutsche Bank AG and Commerzbank AG, the floundering giants of German banking. And while Scholz said aiding mergers wasn’t the main consideration behind the banking union, they could be a side effect of the proposal.The proposal may increase the tensions in Germany’s coalition which has been destabilized by the slump in support for the Social Democrats. Chancellor Angela Merkel is also facing dissent from conservatives within her Christian Democratic Union and that faction is likely to be riled up further by any suggestion the government might give ground over the banking union.The CDU’s initial reaction to the proposal was cautious.“The proposal gets the debate moving again,” Olav Gutting, a CDU lawmaker on the Bundestag finance committee, said in an interview. “We can’t allow ourselves to fall into a permanent blockade. But we’re standing by our line: Risks must first be reduced and controlled on a sustainable basis -- and then you can have a European deposit insurance.”Government spokesman Steffen Seibert said during a regular press briefing in Berlin that Scholz’s proposal “made a contribution to a discussion,” but that it hadn’t yet been discussed within the government.Key steps in the banking union, which was launched in 2012, have already been taken: The European Central Bank was tasked with supervising the biggest lenders, and a new framework was created to deal with failing institutions. Discussions over finalizing the rest have been going on for several years, repeatedly held back by familiar divisions.Fair, Balanced Compromise“We welcome any opening and debate that could contribute to bringing the European deposit insurance scheme into life,” Valdis Dombrovskis, the EU commissioner in charge of financial-services policy, said in an emailed statement, adding that the provision is a key element to completing the banking union. “It is clear that all sides need to compromise, and only a fair and balanced compromise can be successful.”A joint deposit insurance agreement has been the most difficult hurdle as wealthier countries balked at the idea of paying for failures in other states. The German finance ministry proposed a plan where national systems would still serve as the first line of defense in a crisis before countries could turn to a common pot for liquidity.The offer comes with important caveats, however. Germany repeated a demand from predominantly northern European countries that banks might have to set aside capital when they purchase sovereign debt, just as they do with other assets. Currently, sovereign bonds on banks’ balance sheets are considered risk-free by regulators so no such backup is needed.Under Scholz’s plan, government debt would be subject to a combination of a free allowance, risk weights based on credit quality and a “concentration factor” to reflect exposures to a specific country. Any such step would be carefully calibrated and phased in over time to avoid overburdening banks, he said.This idea of stricter rules for sovereign debt has proved highly contentious in the past. Opposition has come from countries with high stocks of public debt such as Italy, where domestic government bonds make up a relatively large share of banks’ total assets.While Scholz’s move on deposit insurance was welcome, an Italian official who asked not to be named said the conditions attached to it were still unacceptable. Germany also urges progress on other important open issues:An insolvency framework for banks: While a special process for big failing institutions has been introduced, lenders that are liquidated under national laws can still be subject to wildly different treatment. In Italy, this has included the use of billions of euros in taxpayer money, something the banking union was meant to clamp down on. Now Germany seeks a “single European set of laws on bank insolvency.”More flexibility for EU banks: Internationally active lenders often complain that they need to fulfill capital and liquidity requirements separately in each country they operate in. They would rather deploy their resources more flexibly across their groups. Smaller countries, whose markets are often dominated by units of foreign banks, have been reluctant to give up control over the local operations. Germany seeks an “appropriate balance” between these positions. Further reduction of nonperforming loans: Soured assets should be reduced to 5% of banks’ balance sheets in all member states, or 2.5% net of provisions. That’s well below the current figures in countries including Greece and Cyprus and a repeated demand from some countries.Scholz also says Europe needs to strengthen its defense against money laundering in the financial system, without going into much detail.Political talks among euro-area governments on the issue are due to take place over the coming weeks. A senior EU official speaking to reporters in Brussels on Tuesday signaled optimism that an agreement may be reached by December on holding further talks aimed at agreeing a phase-in of a deposit guarantee scheme. Countries which were opposing such a plan have watered down their red lines, the official said.If meaningful progress is reached on these issues, it could help address a lack of consolidation among banks in Europe, which has made them less competitive internationally. Bank executives have said that without the proper framework, cross border mergers that could improve efficiency and help slash costs are not in the cards.Security of SavingsThe central lobby organizations for Germany’s savings and cooperative banks, which represent the bulk of the country’s retail lenders, issued a carefully worded statement indicating they’re not completely opposed to Scholz’s plan.“It is understandable to discuss measures to improve the framework conditions of a developing EU capital market,” the DSGV and BVR lobby groups said in a joint statement. “The security of savings is not up for negotiation.”The two organizations are influential voices in Berlin and have traditionally been one of the biggest opponents to any concessions from Germany on the European deposit insurance.(Updates with Italian comment in the 15th paragraph.)\--With assistance from Patrick Donahue, Steven Arons and Nicholas Comfort.To contact the reporters on this story: Alexander Weber in Brussels at email@example.com;Birgit Jennen in Berlin at firstname.lastname@example.orgTo contact the editors responsible for this story: Dale Crofts at email@example.com, Richard Bravo, Chris ReiterFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg Opinion) -- Olaf Scholz’s announcement that he’s ready to make progress on a European “banking union” is eye-catching. Germany has been the biggest block on this vital project, dragging its feet over a “common deposit guarantee scheme” that would ensure equal protection to all small savers across the euro zone. That the country’s finance minister is now open to the idea is welcome.A look at the fine print should temper any optimism, though. Germany has always hinted at the possibility of some form of deposit insurance, just not before countries in the monetary union reduced the risk in their banking systems from sovereign bonds and non-performing loans. These red lines are still there in Scholz’s proposal. There are a few new ones too, for example on corporate tax.The banking union project was a reaction to Europe’s sovereign debt crisis in the early 2010s, which showed the dangers of keeping financial supervision and crisis management at the national level. The euro zone has shifted supervisory powers to the European Central Bank, and created the Single Resolution Mechanism, which uses a common rule book to handle the troubles of large banks.There are still many holes in this process. For example, small and medium-sized banks are often still dealt with domestically, and critics fear the SRM doesn’t have the firepower to deal with a systemic crisis. The glaring omission, however, is the lack of a single deposit guarantee scheme across the bloc. The bill for rescuing savers with deposits of up to 100,000 euros after a bank failure still sits with individual states. For a monetary union, this creates an unacceptable disparity between European citizens.To overcome this problem, Scholz has proposed (in a column in the Financial Times) a new mechanism of “reinsurance.” National deposit guarantees would remain the first line of defense, but member states would be able to borrow from a European deposit insurance fund to cover extra losses. Scholz believes these loans could become outright transfers, but only over time. In any case, he’s clear that the final backstop should remain national. “Where additional financing may be necessary, the relevant member state would step in,” he writes.Such a proposal is less ambitious than what is needed for the euro zone. It preserves fragmentation and doesn’t eliminate the asymmetry between savers in different countries. It’s also unclear whether Scholz — a Social Democrat — is speaking in a personal capacity, or has the backing of Angela Merkel’s Christian Democratic Union.After years in which the banking union appeared dead because of Berlin’s hostility, it’s obviously better that a finance minister seems prepared to negotiate. Once a reinsurance scheme is in place, it may evolve into something more meaningful.But there are many conditions attached to Scholz’s plan. These include the need for euro zone members to make progress on a common corporate tax base and a minimum effective tax rate, which is opposed by low-tax countries. There’s also a requirement for harmonizing national insolvency laws, which is intrinsically complex. He also wants to change the regulatory treatment of sovereign bonds so they’re no longer risk-free, which is opposed by high-debt states such as Italy.It’s hard to argue with most of these suggestions. It’s only right to encourage banks to diversify their holdings of sovereign bonds to limit their exposure to their domestic government. A European insolvency regime would help ensure that the failure of small and medium-sized lenders didn’t follow ad hoc national rules, as happened in Italy in 2017. But there’s no reason why the euro zone cannot make progress on a joint deposit scheme before these problems are resolved. Germany, whose banking system is riddled with problems — at Deutsche Bank AG, notably — could benefit too.Scholz’s move will only be meaningful if euro zone countries abandon their vetoes and engage in meaningful talks on accelerating the banking union. The European Commission has put together a highly unambitious roadmap on the creation of a common deposit insurance, which could do with a refresh. The ECB has given its blessing to the idea. The missing ingredient has been political will. One hopes this time is different.To contact the author of this story: Ferdinando Giugliano at firstname.lastname@example.orgTo contact the editor responsible for this story: James Boxell at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Ferdinando Giugliano writes columns on European economics for Bloomberg Opinion. He is also an economics columnist for La Repubblica and was a member of the editorial board of the Financial Times.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Regulators have pressed Deutsche Bank’s Christian Sewing to give up his dual role as chief executive and investment bank head because of fears his twin responsibilities could undermine the group’s radical restructuring. The European Central Bank and German regulator BaFin want the positions to be separated in the next year or two, as they were before Mr Sewing took charge of the investment bank, according to three people familiar with internal discussions. The regulators have also warned of a potential conflict of interest between the two roles, arguing that the chief executive should promote prudent risk-taking while the top investment banker by definition was a “risk creator”.
(Bloomberg) -- Explore what’s moving the global economy in the new season of the Stephanomics podcast. Subscribe via Pocket Cast or iTunes.Deutsche Bank AG will pass on negative interest rates only to larger corporate customers or the deposits of wealthy individuals and spare most retail clients, Deputy Chief Executive Officer Karl von Rohr said in an interview with Frankfurter Allgemeine Sonntagszeitung.The bank is talking to the customers affected and they understand the issues, von Rohr said in a preview of the interview, which is set to be published on Sunday.German banks have already paid several billion euros in penalty rates for their deposits with the European Central Bank and Deutsche Bank’s payments amount to “several hundred million euros for 2019,” von Rohr said.To contact the reporter on this story: Christoph Rauwald in Frankfurt at firstname.lastname@example.orgTo contact the editors responsible for this story: Anthony Palazzo at email@example.com, James Amott, Matthew G. MillerFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Deutsche Bank on Friday appointed Claudio de Sanctis as global head of its wealth management business. De Sanctis, who was earlier the head of wealth management in Europe for the lender, will also retain his role as chief country officer of Switzerland, the bank said. Before joining Deutsche Bank, De Sanctis was head of private banking, Europe at Credit Suisse.
Deutsche Bank, four months after kicking off the most radical restructuring in its history, is reshuffling its management board in an attempt to accelerate the process. Germany’s largest lender on Friday appointed Fabrizio Campelli to its management board with immediate effect, giving him the role of chief transformation officer. Mr Campelli, a Deutsche veteran for 15 years, will also take on the responsibility for human resources from deputy chief executive Karl von Rohr.
Malaysia has rejected an offer from Goldman Sachs of “less than $2bn” in compensation over the 1MDB scandal as the country’s prime minister sticks to his demand for $7.5bn. “Goldman Sachs has offered something like less than $2bn,” Mahathir Mohamad told the Financial Times in an interview on Friday. Mr Mahathir said the government had also contacted Deutsche Bank and UBS over their dealings with 1MDB, the state investment fund at the centre of one of the biggest alleged frauds in the nation’s history.
(Bloomberg Opinion) -- It’s rare for a European bank to be adding businesses nowadays, as capital constraints curtail dealmaking. The takeover of Deutsche Bank AG’s hedge fund activities by France’s BNP Paribas SA is an exception.There’s no mistaking what’s driving BNP: Absorbing a larger competitor with a chunky client base is one way to try to salvage its own ailing hedge fund division, and to stop its rivals from snapping up Deutsche’s clients themselves. Yet the French bank’s struggles in this business beg the question as to how easily the two units can be combined, let alone expanded.Income from BNP’s equity arm and its operations servicing hedge funds (which sit together in one division of the bank) declined for the fourth consecutive quarter in the three months to September — a fall of 15% this time. A drop in equity derivatives revenue was offset partially by a slight increase in hedge fund business. That’s no doubt a signal from BNP that its gradual absorption of Deutsche’s unit is already encouraging more hedge funds to start using the French bank.BNP is taking over Deutsche Bank’s electronic trading platforms and wants to snag as many as possible of the German lender’s customers. It aims within a year to become one of the world’s top-four prime brokerages (which service hedge funds), Bloomberg News has reported. Ultimately it’s seeking to hold about $300 billion in hedge fund money, or “balances” in industry parlance. That compares with the $500 billion that JPMorgan Chase & Co. already oversees as one of the market leaders. The U.S. bank is eyeing $1 trillion.For the French lender, the long slog is just starting. While the takeover will be completed at the end of 2019, it will take another two years for as many as 1,000 Deutsche employees to move over to BNP. You need to tread carefully when hedge funds have the option of shifting their money to the big Wall Street prime brokerages. Deutsche’s clients have already been defecting and it’s uncertain how much of the $80 billion or so of balances it held in September will transfer across to BNP ultimately.After buying Bank of America Corp.’s prime broking activities in 2008, BNP has stayed focused on U.S. clients. Deutsche should bring more exposure to Asian and European clients, and its trading technology should let BNP go after big quant fund customers.The biggest difficulty is avoiding a culture clash. This deal will mean a sharp rise in the number of products the French bank offers to hedge funds, and its volume of work. Before now, its prime brokerage has been cautious when deciding the type of business (and client) it’s prepared to take on. Deutsche’s has been more adventurous. Melding these different approaches on how much leverage and risk to allow will be critical.There’s about $450 million of extra annual revenue up for grabs here, but BNP has more than $47 billion of yearly sales so it’s hardly game-changing. Venturing into the uncharted territory of a much bigger derivatives business will see BNP edging higher up the danger curve.To contact the authors of this story: Elisa Martinuzzi at firstname.lastname@example.orgMarcus Ashworth 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.Marcus Ashworth is a Bloomberg Opinion columnist covering European markets. He spent three decades in the banking industry, most recently as chief markets strategist at Haitong Securities in London.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.