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 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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DB: Germany's Dilutive Bank

Shares of troubled Deutsche Bank were down 6% in early European trading as the bank’s CEO John Cryan announced a $8.5 billion capital raise through new shares.

This is the fourth time the German bank has gone to the markets since 2010, raising $30 billion, while diluting the stock price each time. Shares are down 72% over that time period.

German media reports say Cryan, who came on board in 2015 may be looking for his own exit package. However the former UBS executive has said he stands behind the bank and will see the reorganization through.

“I am not weary of Deutsche Bank. I said yesterday I am 150 percent in and I am around to see this reversal,” confirmed the CEO.

Cryan also said Deutsche will fold in its PostBank operations, since it cannot get a reasonable price for the German consumer operator.

None of this comes as any surprise to readers of this blog. I have been writing about the cesspool that is Deutsche Bank for more than 7 years and have documented how the bank to care of whistleblowers within the bank’s ranks as well as those in deals with the bank.

To say this is a worthy institution, which should be saved, is a gross distortion of the truth. Just look at the fines and penalties the bank has paid out to regulators worldwide in the last 5 years.

It totals very close to the $30 billion taken out of shareholders pockets through dilutive share issuance. If you owned shares over the last decade you have seen 75% of that wealth dissipated, while the bank continued its questionable operations under three different leadership team.

Deutsche Bank eyes retreat from US

News out over the weekend that Deutsche Bank is mulling a pullback in US operations.

This most certainly has to do with paring costs for the bank, but if could also mean that the bank faces sanctions as a result of the Department of Justice probe into fraud charges resulting from the sale of mortgage-backed securities.

This is the same probe that had the DOJ requesting a $14B settlement. Since CEO John Cryan said he would never pay that amount (or couldn’t) and failed last weekend to get a favorable result for the bank, I believe there may be sanctions against the bank going forward, which would necessitate it to pull back from certain security trading operations.

Certainly the bank’s Asset Management division is its most profitable and most troubled. A hit against the asset management arm will cause much more pain for Germany’s largest bank.

This move is one of the last in a desperate attempt to keep the doors open.

The reports say that the bank is not looking for a sale, but a pullback, which tells me there are no buyers, since a bank searching for liquidity is far more open to a sale than shutting down operations to pare costs.

Cryan has to know when to Fuld 'em

The similarities between Deutsche Bank and Lehman Bros. grow by the day.

CEO John Cryan is pulling out the Lehman playbook used not so effectively by ex-Lehman CEO Dick Fuld.

Layoffs abound as the German bank cuts losing divisions, just like Lehman.

Defections of the top traders and execs continue across the globe, just like Lehman.

The bank just completed a sale that it said lost the bank more than $100M, but it brings capital in, which is the much-needed life blood right now, just like Lehman.

Cryan also professed that the bank does not need a bail out since it has “plenty of liquidity,”  just like Lehman.

However the German financial press has reported that plans are being drawn up, despite German Chancellor Angela Merkel saying on Monday no bail out would come.

Why am I continuing to write on Deutsche’s troubles?

Because unlike Lehman’s demise, there is no central bank cure for this catastrophe.

The size of its derivative book, which is conservatively $50T notionally, could create a $2T shortfall and a huge drain on global liquidity at a time when central banks have record debt.