The good news: there will still be bonuses this year, which is something. The even better news, for the tantric bonus fans among us: it’ll be a while before you see it all. Read more »
For all their saber-rattling and bold talk about a fix to the problem of global financial risk, the Germans haven’t done a hell of lot to rein in their banks. There is, for instance, no Großdeutschesvolckerregierung. At least, not yet. Read more »
Bank earnings season is always a little surreal, I guess because there’s an inherent surrealism about banking. Deutsche Bank reported earnings today,1 and those earnings had an up-is-down quality that Bloomberg’s summary captured in this amazing sentence:2
Deutsche Bank AG, Europe’s biggest bank by assets, exceeded a goal for raising capital levels as co-Chief Executive Officer Anshu Jain focused on bolstering the firm’s finances rather than limiting losses.
So there’s one way of running a business where you bolster your finances by making money. And then there is global banking. Here is another, possibly even more astonishing line from the same article:
Deutsche Bank “took pain” in the quarter by booking a loss to boost its capital ratio without selling shares, Jain said.
Booking a loss to boost its capital ratio. Losing money, in the regular universe, should reduce your capital: capital is mostly retained earnings. Everything here is backwards.
There are two questions worth asking about today’s Wall Street Journal story about how Deutsche Bank “made at least €500 million ($654 million) in profit in 2008 from trades pegged to the interest rates under investigation by regulators world-wide”:
- is that a lot?, and
- did they do it by manipulating Libor?
The second one is hard, huh? Here’s the Journal:
[A] former employee has told regulators that some employees expressed concerns about the risks of the interest-rate bets, according to documents. He also said that Deutsche Bank officials dismissed those concerns because the bank could influence the rates they were betting on.
A Deutsche Bank spokesman said those allegations were “categorically false.”
So, who knows; Yves Smith says “unless the source can provide some sort of supporting evidence, this is ‘he said, she said,’ and the matter will shake out in the German bank’s favor.” I sort of come at this from the other direction, which is:
- Every other bank has mountains of emails and IMs to the effect of “hey we’re gonna go mess with Libor don’t tell anyone.”
- Deutsche isn’t, like, the #1 most-careful-with-emails-and-IMs bank in the history of banks.
- So, totally possible that supporting evidence will float up, no?
Also totally possible that these were legitimate trades unrelated to a few bad apples at DB who were admittedly manipulating Libor, of course. But where is the fun in that?
So let’s talk about the first question. Read more »
Deutsche Bank co-CEO Jürgen Fitschen, already the subject of a German tax-fraud probe, has come under further pressure after political leaders accused him of trying to influence the investigation by calling a senior German politician to protest a police raid on the bank’s headquarters last week. On Thursday, a day after the surprise search, Mr. Fitschen contacted Volker Bouffier, governor of the state of Hesse, where Deutsche Bank is based, to complain about the action. Mr. Bouffier declined to intervene, according to his spokesman. The state government has ultimate authority over the prosecutor’s office…The Deutsche Bank CEO faced criticism from senior German lawmakers on Monday who accused him of trying to undermine the judicial process. The call has left the impression that Deutsche Bank thinks it is “above the law,” said Michael Meister, a senior official in Chancellor Angela Merkel’s center-right party. “The prosecutor’s investigation must be supported,” he said. “Deutsche Bank has to send a clear signal.” Other political leaders were less polite. “A fish rots from the head down. That also applies to Deutsche Bank’s boardroom,” the Handelsblatt newspaper quoted Green party co-chief Jürgen Trittin as saying. [WSJ]
Our German friends are issuing walking papers to a whole bunch of Houston-based power and gas traders, part of cuts that have also claimed the bank’s commodities chief. More than 50 jobs are being cut. Read more »
Cuts are said to have gone down at the other DB. Read more »