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Deutsche Bank: Germany's Financial Colossus Stumbles

theguardian.com

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Re: Deutsche Bank: Germany's Financial Colossus Stumbles

#31

Post by paganel »

vegabook wrote: post #16

Deutsche Bank is counterparty to 55 trillion euros of derivatives contracts (about 65 trillion USD). I worked for 3 years on its trading floor. It was Sales-a-gogo. "Print as much as you can". It's one of the very biggest counterparties to derivatives. Imagine if there was basis risk of only one tenth of one percent on those books (ie hedge imperfection usually due to a third factor such as credit quality or geograph…

> I think this bank is Exhibit A to the catastrophic excesses of the past 20 years.

Only partially related, I remember one of the German landsbanke (can't remember its name) buying full one-page splashy ads in magazines like The Economist, back in 2007. Only one year later they went catastrophically under because they had bought in into the subprime lending and its derivatives' mania. I remember one of the directors saying something like "we didn't know what exactly we were buying, those products were too complicated for us, we trusted the people who had sold them to us". It's fools all the way down.

Re: Deutsche Bank: Germany's Financial Colossus Stumbles

#32

Post by TheLogothete »

Kristine1975 wrote: post #13
wobbleblob wrote: post #11

Earlier quoted context omitted.

My colleague from Greece has been giddy as a schoolboy about this story all week. Not quite the roaring, thunderous fits of laughter as with the Volkswagen scandal, but this is still developing.

I'm from Germany and the troubles of the Deutsche Bank please me to no end. The only thing I'm scared of is that it will be declared "too big to fail" and bailed out with tax money, while at the same time there's no money for schools, police, refugees etc because Wolfgang Schäuble is obsessed with his "black zero".

If there is a too big to fail chart, DB will be at the very top of it.

Re: Deutsche Bank: Germany's Financial Colossus Stumbles

#33

Post by patrickk »

Kristine1975 wrote: post #13
wobbleblob wrote: post #11

Earlier quoted context omitted.

My colleague from Greece has been giddy as a schoolboy about this story all week. Not quite the roaring, thunderous fits of laughter as with the Volkswagen scandal, but this is still developing.

I'm from Germany and the troubles of the Deutsche Bank please me to no end. The only thing I'm scared of is that it will be declared "too big to fail" and bailed out with tax money, while at the same time there's no money for schools, police, refugees etc because Wolfgang Schäuble is obsessed with his "black zero".

As an Irish person living in Germany (partially as a result of an extremely ill-advised bank bailout), it's quite amusing to watch. I've watched this exact scenario happen in my own country, except with retail "pillar" banks instead of investment banks. I compare bankers to the monarchy of old, they are completely unelected and hold a huge amount of power.

You can be sure that if the shit really hits the fan, Deutsche will be bailed out, no matter the cost. I would bet anything on this happening.

Re: Deutsche Bank: Germany's Financial Colossus Stumbles

#34

Post by Kristine1975 »

patrickk wrote: post #33
Kristine1975 wrote: post #13

Earlier quoted context omitted.

I'm from Germany and the troubles of the Deutsche Bank please me to no end. The only thing I'm scared of is that it will be declared "too big to fail" and bailed out with tax money, while at the same time there's no money for schools, police, refugees etc because Wolfgang Schäuble is obsessed with his "black zero".

As an Irish person living in Germany (partially as a result of an extremely ill-advised bank bailout), it's quite amusing to watch. I've watched this exact scenario happen in my own country, except with retail "pillar" banks instead of investment banks. I compare bankers to the monarchy of old, they are completely unelected and hold a huge amount of power. You can be sure that if the shit really hits the fan, Deutsch…

Deutsche will be bailed out, no matter the cost. I would bet anything on this happening.

The bank always wins :-(

Re: Deutsche Bank: Germany's Financial Colossus Stumbles

#35

Post by junto »

1ris wrote: post #14
jgreen10 wrote: post #6

Well, Germany has been allowed to act as the emperor with no clothes for a while now; an economic powerhouse sitting on empty pension chests with an ageing population. To compare pension fund assets: US: $46k/capita UK: $42k/capita Netherlands: $76k/capita Germany: $2.9k/capita http://www.oecd.org/finance/Pension-funds-pre-data-2015.pdf

Germany does not have such a thing as a pension chest. Pensions are directly paid by the working generation. That has it's problems, but it does also have it's benefits and makes this comparison useless.

> Germany does not have such a thing as a pension chest. Pensions are directly paid by the working generation.

That's only the statutory part though. You are advised to contribute to an occupational and/or private arrangement alongside the statutory scheme. They operate differently.

The underlying problem Germany has is the population dynamics. The population is an ageing one. Lots of people are living longer and not enough children are being born to cover the gap. It might be politically unpopular, but importing refugees and successfully converting them to integrated German tax payers, might well be a long term goal of the state in order to stave off the pensions crisis.

Re: Deutsche Bank: Germany's Financial Colossus Stumbles

#36

Post by wobbleblob »

Sidon wrote: post #29
wobbleblob wrote: post #11

Earlier quoted context omitted.

My colleague from Greece has been giddy as a schoolboy about this story all week. Not quite the roaring, thunderous fits of laughter as with the Volkswagen scandal, but this is still developing.

Maybe your colleague from Greece should realize that when DB 'falls' tons of people will take the fall for it, regular people like you and me, people who are just trying to make a living, like all those poor fucks in Greece. The group of people taking the fall for it won't be limited to Germany, you can be sure Greeks will feel it as well. Tell him to just stfu and get back to work.

Put yourself in their shoes for a moment. For the past 8 years, day in day out you have to hear jokes about how dishonest and unreliable Greeks are, that they caused these problems for us with their cheating, how they should be strictly honest and reliable like Germans, how they shouldn't spend money they don't have and get their finances in order like Germans, and then the Volkswagen scandal happened, and now this. You know, it doesn't involve me at all, but I can imagine why he finds this amusing.

Re: Deutsche Bank: Germany's Financial Colossus Stumbles

#37

Post by mohawk »

vegabook wrote: post #16

Deutsche Bank is counterparty to 55 trillion euros of derivatives contracts (about 65 trillion USD). I worked for 3 years on its trading floor. It was Sales-a-gogo. "Print as much as you can". It's one of the very biggest counterparties to derivatives. Imagine if there was basis risk of only one tenth of one percent on those books (ie hedge imperfection usually due to a third factor such as credit quality or geograph…

You've hit the nail on the head, the derivatives they have on their books are massive compared to shareholder equity. "Counterparty risk" are the words nobody analysing bank's derivatives positions wants to hear.

It's a terrible mistake there has never been a separation of investment banking from commercial banking in Germany (i realise the line is hard to draw), because the German taxpayer is essentially guaranteeing this shoddily run bank.

Unfortunately German politicians seem to be quite oblivious to this problem. Joe Ackermann (then CEO of DB) was giving Merkel advice on the financial crisis of 2008, so there seems to be some asymmetry of information there...

Re: Deutsche Bank: Germany's Financial Colossus Stumbles

#38

Post by emptyfile »

chvid wrote: post #12

Germany led by Merkel has set itself up for trouble. Cyprus and Greece have created a precedence for creditor bail-ins. Public finances are stretched due to refugee inflows and opposition to Merkel is growing even internally in her massive coalition government. This setup may lead to something not predicted (ie. DB not getting the guarantees it needs or even a creditor bail-in) or more predictively the rise of left o…

>Public finances are stretched

As others have pointed out

https://www.cia.gov/library/publications/the-world-factbook/...

https://en.wikipedia.org/wiki/List_of_government_budgets_by_...

The only two countries in the world which have a higher surplus than Germany are Norway and Qatar

Re: Deutsche Bank: Germany's Financial Colossus Stumbles

#39

Post by Tepix »

Hermel wrote: post #5
_Codemonkeyism wrote: post #3

German media makes a point that Deutsche Bank has been hit hard with the fines from their (past) crimes. Investment bankers and CEOs took their bonuses and moved on. Spiegel reports Deutsche Bank used $15 billions since 2012 for legal disputes.

I wonder why there isn't more resistance against the exorbitant fines the US charges European banks every year. These fines have become a significant business risk and should be regulated in free trade agreements, just like subsidies are limited in such agreements. For many European banks, the US business is a money drain, i.e. it costs them more than they get from it. However, they cannot escape US regulation and le…

There appear to be two reasons why Deutsche Bank got the highest penalties:

a) They were among the worst offenders

b) They tried to get rid of the lawsuits quickly.

Re: Deutsche Bank: Germany's Financial Colossus Stumbles

#40

Post by vetinari »

Kristine1975 wrote: post #7
Hermel wrote: post #5

Earlier quoted context omitted.

I wonder why there isn't more resistance against the exorbitant fines the US charges European banks every year. These fines have become a significant business risk and should be regulated in free trade agreements, just like subsidies are limited in such agreements. For many European banks, the US business is a money drain, i.e. it costs them more than they get from it. However, they cannot escape US regulation and le…

Maybe the banks should simply stop committing crimes.

These are not crimes where the banks are headquartered and from where they are doing the business.

Maybe US should not project their legislation on foreign subjects? They didn't vote for anyone who created that legislation anyway.

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