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Deutsche Bank with billions in profit: nice appearance

2022-01-27T15:34:48.843Z


Deutsche Bank made passable money in 2021. In addition to the investment bankers, this time even the shareholders should benefit. But the next scandal is already rolling towards the institute with a vengeance.


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Deutsche Bank boss Christian Sewing: Not a word of thanks to the federal government

Photo: Mario Andreya / dpa

When it comes to Deutsche Bank, three things are important to the public: Taxpayers are interested in knowing whether the institute is producing so much bullshit that the state may have to rescue it soon.

The shareholders are interested in whether they can earn money with an investment.

And everyone is interested in whether the long-serving scandal noodle will soon make headlines.

At the beginning of 2022, the situation is diffuse.

Deutsche Bank is currently a long way from a threatening imbalance.

Unlike a few years ago, when threats of punishment from American authorities caused panic in Frankfurt's twin towers.

For 2021, CEO Christian Sewing, who is now in his fifth year in office, reported a profit of around 3.4 billion euros before taxes and 2.5 billion euros after taxes.

That was more than four times as much as 2020 and also more than expected.

So far, Sewing has managed to reduce costs to some extent, albeit by cutting around 16,000 employees and closing branches, and stabilizing sales.

Important risk indicators such as the equity or debt ratio point in the right direction;

even the rating agencies that judge the stability of the bank have rediscovered Deutsche Bank.

In short: for the time being, taxpayers can remain calm as soon as the Deutsche Bank logo appears on the screen in the TV stock market report.

Good for their top employees and bad for their owners

Unlike the shareholders.

Since Sewing took office in spring 2018, the stock has been flat.

Now the bank is waving a dividend of 20 cents per share.

The latter is better than nothing, but both together are a bad joke given that the group's investment bankers have been paid many times what the shareholders have been fobbed off for decades.

Basically, it's always been like this: Deutsche Bank is good for its top employees and bad for its owners (except for the well-paid investment bankers who also own shares).

It is not very likely that things will get much better in the foreseeable future.

The bank intends to repay a total of five billion euros to shareholders via dividends and/or the buyback of shares.

But the period of time over which it intends to do this has so far been left open by the management.

And whether the bank can finally afford to adequately satisfy its shareholders at all depends largely on how the well-cushioned investment bankers do their job.

Because the majority of the group's profit is generated by them, despite all the promises of a more balanced mix of money sources.

The other core divisions - asset management, mass customer business and the so-called corporate bank - are little more than half-decorated accessories in terms of numbers.

That's a problem, as is the fact that the investment banking boom is waning significantly.

This has been one of the Corona winners since the outbreak of the pandemic.

Many companies turned to their respective banks for advice and capital, and Deutsche Bank also benefited from this.

Their trading in securities flourished, especially in government and corporate bonds, which is their prime discipline.

But the great nervousness in the economy is over, even if it remains to be seen whether and how the Ukraine crisis will have an impact.

Already in the fourth quarter of 2021, the result in investment banking looked extremely poor.

If the corona virus gradually dies down and the situation normalizes, the glory days in trading will be over.

But that would be needed in order to achieve the bank's self-imposed target of eight percent return on equity this year.

At the end of 2021, the return was 3.8 percent, compared to 4.8 percent in the first nine months.

Just hoping that the expensive restructuring of the bank will be largely completed and that costs will fall accordingly will not be enough - money must also come in.

And the fact that the group can continue to gorge itself on discounted central bank money for years to come,

In any case, "price adjustments in the deposit business," as Sewing calls the penalty interest on deposits from companies and savers, cannot compensate for the slowdown in investment banking;

even if Deutsche Bank earned 360 million euros with those penalty interest last year alone.

Even the monstrous corona aid provided by governments, from which banks in particular have implicitly benefited, cannot be continued indefinitely.

The assumption of credit risk by the taxpayer was due to an exceptional situation, the risk provision for loan defaults was extremely low.

Strange, by the way, that Sewing did not say a word of thanks to the federal government on Thursday for the state liability, which enabled the credit industry - and thus also his bank - to stylize itself as the savior in the corona crisis.

Trouble with DWS

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DWS boss Asoka Wöhrmann: Two scandals on the cheek

That leaves Deutsche Bank's »signature move«, the scandal factor.

The group remains a reliable source of headlines.

The US Federal Reserve, for example, finds that the bank is sloppy with its programs that monitor compliance with the rules.

The German financial regulator Bafin has just fined her 8.7 million euros because the institute has not effectively implemented EU regulations intended to prevent manipulation of the Euribor reference interest rate.

In Spain, she has to reimburse millions because of incorrect advice.

All of this is topped by its subsidiary DWS, which has invested almost a trillion in customer assets in the capital markets.

Their boss Asoka Wöhrmann has two scandals on his cheek.

There are the allegations of his former sustainability boss Desirée Fixler.

The American, who was publicly fired after a short term in office, accuses the DWS management of investing customers' money far less "greenly" than claimed.

The US Securities and Exchange Commission and the US Department of Justice are investigating the allegations.

Neither institution tends to be lenient, especially when it comes to Deutsche Bank, the former house bank of Donald Trump, a real estate entrepreneur who has failed several times.

In addition, Wöhrmann maintained a curious closeness to the obscure businessman Daniel Wruck. Both men sent a six-figure sum of money back and forth in 2017, allegedly to buy a Porsche Panamera. In the near future, however, Wruck was looking for investors for a fintech company. Money came from Deutsche Bank, among others. Threader on their side: Wöhrmann, at the time head of the private customer business at Deutsche Bank. The fact that Wöhrmann was sending emails from his private account, some of which were confidential attachments, doesn't make things any better. She stinks to high heaven.

It is unclear how long Sewing will continue to hold on to Wöhrmann.

The Deutsche Bank CEO remained nebulous on Thursday – forced to do so in view of ongoing investigations.

But entertainment for the public, that much is clear, will continue to be provided by Deutsche Bank.

The bank can't get that boring.

Source: spiegel

All business articles on 2022-01-27

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