Deutsche Bank executive woes continue

Deutsche Bank announced over the weekend that its top C-Suite executives would not be getting a bonus again this year.

CEO John Cryan strangely made the announcement Friday night at Austin’s South By Southwest conference, stating that for the third consecutive year top execs would forego year end payouts as the bank struggles to pull itself out of the mire of questionable trading practices.

As many of you may know I wrote extensively three years ago about the rash of suicides within the bank just as the Libor scandal was breaking.

The German uber bank did note that bonuses for other employees would total just over $2B for 2017.

The news comes as the 10-year anniversary of Bear Stearns’ demise hits Thursday, which led to the Great Recession. On March 14th 2008, the Federal Reserve agreed to provide a $25B loan to keep the bank solvent for 28 days as they unwound Jimmy Cayne’s troubled bank.

As the Fed dug deeper into Bear’s books that offer was pulled a day later and on the 16th of March, JPM CEO found the pot gold scooping up Bear for seven cents on the dollar with a $2 a share offer.

Dimon also made sure that nothing on the troubled bank’s books could come back and bite him with Fed chief Ben Bernanke assuring Dimon the Fed would take the hit as it put up $29B and JPM invested $1B for the sale.

In the following week a Bear shareholder lawsuit was filed and JPMorgan raised its offer price from $2 a share to $10 a share to quell the suit. As a point of contrast Bear Stearns stock was trading at $93 a share in late February 2008.


Deutsche, Barclays suffering under dark clouds

I have been following Deutsche Bank and Barclays as bellwethers for the troubled uber banks as global interest rates begin to climb.

I have written much about Deutsche Bank’s troubles with Libor manipulation and the strange circumstances of key executives allegedly taking their own lives.

Well, now I see that Barclays has its own strange circumstances for the bank’s Libor executives final demise. More on this in the future.

Over the last year, DB shares are down -21%, while Barclays is down only 3 percent over the same time frame. But Barclays shares followed DB’s downward trend line until very recently.

Barclays CEO Jes Staley had his pay in 2017 cut by 8.5 percent to $5.39 million, the bank reported Thursday morning. We have not seen DB’s Jon Cryon’s compensation package for 2017.

Staley’s 2016 bonus is still under pending the outcome of the Financial Conduct Authority (FCA) probe into his handling of the whistleblower incident.I am looking into whether one of the strange deaths is connected to this action.

Allegedly Staley ran his own investigation in order to identify the whistleblower.

I’ll be keeping an eye on these two banks to see. But I believe one or both could be this year’s Lehman Bros.

Deutsche Bank’s survival needs a ‘miracle’: Report

A Wall Street research firm issued a report Tuesday questioning the leadership and the short-term future of Deutsche Bank.

In the report Autonomous Research stated that the troubled German bank may be “beyond repair” barring a “miracle” boom at its fabled bond-trading business.

 Autonomous co-founder Stuart Graham wrote that the past decade of scandals have left Deutsche with a horrible reputation on the street and after paying billions in penalties the bank’s underinvestment in technology has left it a “clear laggard” to rivals like JPMorgan.

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Is Vatican Bank pedo scandal tied to Italian banking fraud trials?

Looking into the latest Vatican Bank scandal involving George Cardinal Pell and pedophilia charges being brought against him in his home country of Australia, I’m curious why this news broke now.

The bank’s official name is the Institute for the Works of Religion, and to say it has had a checkered past with many questionable dealings is well documented. The latest being its involvement with Italian and global bankers dealing with Italian bank takeovers including the disastrous  Monte Paschi merger with another Italian bank Banca Antonveneta in 2007.

Cardinal Pell was appointed by Pope Francis to oversee an extensive investigation of the Papal central bank’s dealings with Deutsche Bank, Nomura Bank and others involvement in secretly funding criminal fraud charges.

I do not know if the charges in Australia that Cardinal Pell faces have merit, but if they do it is a heinous crime against innocent victims and he should be punished to the greatest extent of the law.

My interests are in the timing of the charges, since there are a number of criminal trials occurring in Italian courts dealing with the fraud charges being brought against both the banks and individuals, some of whom have ties to the Vatican Bank.

Another reason I question the timing on these charges is that Libero Milone, a London-trained accountant who had led Italy’s branch of Deloitte accounting firm, resigning as the Holy See’s first “auditor-general” earlier this week.

Milone was charged by the Pope to get the books in order two years ago.

I will be following this closely since much of this information came out in my Banker Suicide series with the death of David Rossi from Monte Paschi. I will be talking to parties involved with the trials as it goes forward.

Fed stress test did not have banks breaking a sweat

So most of the 34 major US banks passed the Federal Reserve’s open-book, take-home stress test.

However there is an asterisk. Capital One has too much questionable credit card debt and needs to submit a new plan by year-end. Deutsche Bank and Santander did not take the stress test because the banks are still reorganizing operations under the Fed’s purview and could not handle the test without going into cardiac arrest.

While no one knows what the parameters were for this test as far as capital levels and needed reserves, I assume the bar required to pass was a bit lower than last year’s test due to all the banks passing for the first time since the financial crisis of 2008-2009.

However we will not know what the parameters were for passing.

We did see what these banker’s are doing with the new-found freedom as all the banks announced dividend raises and stock buybacks. The amount of capital being deployed to shareholders could reach $30B, according to some estimates.

However the account holders in these banks will not see any additional interest on their savings as a result of the great news coming out of the stress test.

While the cash being deployed to shareholders is on a different balance sheet line than the interest paid line, I’m sure some of this largess could be used to raise interest paid by 0.25% and benefit the consumers that have been hobbled for 10 years with near zero interest paid to savers.

But that will not happen because the Fed cannot control bank interest paid cash, which could be saved or used to pay down debt and not put back into the stock market to help inflate that asset bubble like dividends and stock buybacks.