Föhrenbergkreis Finanzwirtschaft

Unkonventionelle Lösungen für eine zukunftsfähige Gesellschaft

As the Deutsche Bank Turns

Posted by hkarner - 9. Juli 2019

Date: 09-07-2019
Source: The Wall Street Journal By The Editorial Board

Politicians share the blame for this financial soap opera.

Maybe this time will finally be the charm for Deutsche Bank , which over the weekend announced the latest in an uncountable series of turnaround plans. Executives hope cutting 18,000 jobs, hiving off €288 billion in assets into a bad bank for winding down, and withdrawal from international investment banking will save the German lender.

We’ll leave investors to sort all this. But there’s a policy tale here about trying to graft a would-be global investment bank onto a continental European economy—and about the ways regulators make matters worse.

This is partly a story of questionable business judgments over two decades. Starting in the mid-1990s, Deutsche set about converting itself into an investment bank to rival Wall Street. Its traditional focus was commercial banking for German industry, and Germany lacked a vibrant domestic financial market. So the bank expanded through acquisitions in the U.K. and U.S. that it struggled to absorb, including Wall Street giant Bankers Trust.
The German government has also meddled in Deutsche to ill effect. Chancellor Gerhard Schröder in 2004 tried to prod Deutsche to buy Postbank, Germany’s postal lender, in an effort to create a global German champion. Deutsche finally bought Postbank in 2010—by then Mr. Schröder was long gone—but has struggled to integrate its purchase or sell what has become one more drain on profits.

Berlin has never let its big bank consolidation dream die. Earlier this year it wasted weeks of managers’ energy trying to orchestrate a merger between Deutsche and rival Commerzbank . But forget any synergies from such a tie-up, since politicians and unions resist paring Deutsche’s bloated domestic workforce.

Berlin also refuses to consolidate the nearly 1,300 smaller savings cooperatives or banks owned by local and state governments. This extreme fragmentation, with most competitors free of worries about profitability and obliged to funnel credit to favored borrowers, explains why Deutsche struggles to make money in Germany—though its home market is Europe’s largest economy.

A dishonorable mention also goes to the European Central Bank. Deutsche has even struggled to make money the old-fashioned way—taking deposits and making traditional loans—due to the ECB’s negative deposit rate and quantitative easing. Those policies were intended to encourage banks and other investors to take more risks to help the economy grow. Instead they have hobbled Deutsche’s profitability precisely when retained earnings could help a restructuring.

These regulatory and monetary headwinds would work against any overhaul, never mind a plan premised on optimistic assumptions about a slimmed-down Deutsche’s business prospects. Investors will be betting not only on whether Deutsche’s managers know how to repair the bank after so many years of failure. They’re also betting on whether Berlin will ever let Deutsche succeed.

Kommentar verfassen

Bitte logge dich mit einer dieser Methoden ein, um deinen Kommentar zu veröffentlichen:


Du kommentierst mit Deinem WordPress.com-Konto. Abmelden /  Ändern )

Google Foto

Du kommentierst mit Deinem Google-Konto. Abmelden /  Ändern )


Du kommentierst mit Deinem Twitter-Konto. Abmelden /  Ändern )


Du kommentierst mit Deinem Facebook-Konto. Abmelden /  Ändern )

Verbinde mit %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d Bloggern gefällt das: