We've been accused around here of being a little hard on Deutsche Bank, but even we would never dare drop the hammer on John Cryan's little German bank like Autonomous Research just did:
Deutsche Bank AG may be “beyond repair” unless there’s a “miracle” boom at its once-mighty bond-trading business, according to Autonomous Research LLP.
The firm’s “faltering” fixed-income and currency markets franchise, which generates about a quarter of profits, can no longer be counted on to drive earnings, Autonomous co-founder Stuart Graham said in a Sept. 18 note.
And that's the nice part.
“When we consider the basics of what makes a bank a winner -- trust (or brand), balance-sheet muscle, technology and its people -- Deutsche looks to be in very bad shape,” Graham said. “In such situations it is inevitable that some investors start to question whether the bank has the right leadership.”
To paraphrase: "You guys know how like some banks are good because they have - like - good CEOs, tons of money and strong loans? Yeeeeeeah...well, Deutsche Bank has - like - none of those things because Deutsche Bank is a fucking DEAD BANK WALKING."
And Graham was also pretty clear that this is will get better in the year two thousand and NEVER:
Since the turn of the century Deutsche Bank has failed to keep pace with IT spending at JPMorgan. Deutsche Bank’s annual investment was roughly the same amount as the U.S. firm in 2000. This year it has slated to spend $4.1 billion, compared with the $7.4 billion JPMorgan is forecast to spend, Autonomous estimates.
“This falling behind on technology matters a great deal, in our view, since 65 percent of Deutsche Bank’s total group revenues come from businesses which compete head-on with JPMorgan,” Graham said.
That's what we in the banking industry call "Dropping the Dimon on yo ass."
But the coup de grâce of Graham's insane note is apparently the ending:
“Given all of these problems, we simply do not think Deutsche is cheap enough,” even after the “share price has performed horribly year to date,” Graham said. With better returns on offer at other banks, “why bother owning Deutsche?”