Deutsche Bank is Germany's biggest bank by a considerable margin, and a dominant force in continental Europe. However performance in recent years has been disappointing or worse. During the 1990s, DB embarked on an ambitious acquisition spree, snapping up several leading investment banks including Bankers Trust and Morgan Grenfell. By the mid 2000s, this had elevated the group to the upper ranks of the global industry, but prompted a backlash at home, with accusations that DB was neglecting domestic customers. It attempted to redress that balance by taking control of mass-market German lender Postbank, while also walking the tightrope of the global investment banking crisis. However, performance remained below-par, Postbank never fitted in, and unethical investment trading resulted in a string of huge regulatory fines. American-born John Cryan was appointed as CEO in 2015 to guide the group out of its difficulties. His original plan was to spin off Postbank again and refocus on commercial banking and asset management. However, this strategy was completely revised in early 2017, after two years of huge impairment charges and litigation costs totalling billions, and the absence of a willing buyer for Postbank. A massive fine imposed by US regulators in late 2016 caused DB's market value to plunge to its lowest level for decades. Revenues for 2016 were E30bn, but combined net losses for 2015 and 2016 were over E8bn. Founded in Berlin in 1870 to fund foreign trade as well as domestic lending and saving, Deutsche Bank was the biggest bank in the world until 1914. It was broken up by the Allies after WWII but gradually reassembled those disaparate pieces, returning to international banking in the 60s, and then global investment banking in the 70s. Adbrands no longer profiles this company but subscribers may access account assignments and contact information. The searchable account assignments database is available to full subscribers to Adbrands.net premium services. Click here to access Adbrands account assignments (subscribers only); or see here for information on how to subscribe.
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Capsule checked 28th October 2016
Adbrands Weekly Update 9th Mar 2017: Struggling Deutsche Bank reversed two key strategic decisions announced in 2015 and is seeking to raise E8bn from shareholders to shore up its balance sheet plus another E2bn from selective asset sales. But plans to spin off its mass-market Postbank retail division - the so-called "yellow bank" - have been cancelled for lack of a willing buyer; so has a decision to split its corporate finance and securities trading businesses. DB will, however, seek an external partner for a minority shareholding its asset management division.
Adbrands Weekly Update 5th Jan 2017: The year ended with yet more deals and lawsuits between US regulators and European banks in connection with the mis-selling of mortgage securities in the run-up to the 2008 financial crisis. Deutsche Bank managed to negotiate down a potentially catastrophic $14bn fine to a still-damaging $7.2bn. Of this, $3.1bn will be paid in cash, and the remainder is to be reflected in loan discounts and other forms of financial assistance to US homeowners. At the same time, a separate settlement of $5.2bn was agreed with Credit Suisse, to be split along separate lines between penalty payment and consumer relief. However, no such deal has been reached with Barclays despite months of talks. As a result, the Justice Department has issued a lawsuit against the British bank and two former employees for selling more than $31bn of mortgage-back securities to investors between 2005 and 2007 despite knowing the loans involved had material defects.
Adbrands Weekly Update 22nd Sep 2016: US regulators served Deutsche Bank, Germany's biggest financial services company, with a potentially crippling $14bn fine to settle allegations it mis-sold mortgage securities in the run-up to the 2008 financial crisis. Despite its sizeable balance sheet of E1.6 trillion, Deutsche Bank's market capitalisation has plunged in recent years as a result of multiple problems, and this week slumped to less than E16bn, only slightly more than the value of the fine. In other such situations, banks have been able to negotiate a lower eventual fine. Goldman Sachs, for example, was served with a $15bn fine for the same misdemeanour, but negotiated the final amount down to $5bn. In an act of public defiance regarded by many observers as ill-advised, DB issued a public statement to similar effect, saying it refuses to pay the stated fine but will seek to negotiate a lower sum. This, it is thought, is only likely to encourage US regulators to dig in their heels, especially in the wake of counter-claims by EU regulators against American companies, like the $13bn in back taxes recently claimed by the EU from Apple.
Adbrands Weekly Update 22nd Oct 2015: Deutsche Bank unveiled a complete overhaul of both its management team and its operating structure ahead of what is expected to be a whopping E7bn loss for the most recent quarter. DB has announced plans to write off E6bn against goodwill and other intangibles, and will add more than E1bn to its litigation provisions. This week, newly appointed co-CEO John Cryan announced the departure or reassignment of five of the bank's current ten-person executive team, including several executives close to his predecessor Anshu Jain, or associated with the group's several recent clashes with regulators. He is also splitting the group's investment banking division into two units, one focussed solely on trading and markets, and the other on M&A and corporate services, in an attempt to compete with more established US rivals. Cryan will become sole CEO next May following the departure of current co-CEO Juergen Fitschen.
Adbrands Weekly Update 11th Jun 2015: In the latest blow to Germany's biggest and best-known financial institution, the co-CEOs of Deutsche Bank, Juergen Fitschen and Anshu Jain, offered their resignations. Jain will step down later this month, to be replaced by John Cryan, formerly finance chief at UBS. Fitschen will stay on until next May, and will leave Cryan as sole CEO when he finally departs. This unexpected development follows multiple managerial missteps and a heavy round of financial penalties. Moves to cut jobs and bank branches have prompted widespread opposition from both unions and the media, and shareholders have become increasingly restless. Adding to their woes, India-born Jain does not speak fluent German, creating another focus for negative criticism; while Fitschen is currently on trial on charges of giving false testimony in an earlier case prompted by the collapse of German media empire Kirch in 2002. Kirch's family accuse DB of contributing to the group's financial meltdown.
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