How a Pillar of German Banking Lost Its Way
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Re: How a Pillar of German Banking Lost Its Way
#2 This is the bank's situation, 146 years after its founding. Once a symbol of Germany
-- Germany Inc. -- and the country's financial pillar. Its managers were respected, admired
as people who lived up to the country's values and expected the same of their employees.
Those times are gone. Deutsche Bank as we once knew it is dead. As one of the bank's former
senior managers said, the bank stumbled into a "Darwinist niche," a place where there were
no more competitors and no more enemies. And the gentlemen at the top of the company became
complacent and inattentive.Re: How a Pillar of German Banking Lost Its Way
#3I hope there will be a lesson that a steady business or being conservative is often a good thing. It seems there is a lot of pressure to grow until the only way for growing more is to take on a lot of risk or doing unethical things.
Re: How a Pillar of German Banking Lost Its Way
#4I'm not too familiar with the German culture. Can someone explain to me what is this "German provincialism" that they talk about? Do Germans see themselves as provincial? Does anyone else see them as provincial?
Re: How a Pillar of German Banking Lost Its Way
#5I used to work with DB throughout the 2000s. Occasionally, I was surprised on the levels of incompetence of middle management. It isn't uncommon in investment banks, especially when the economy is good enough, but DB upped it to the whole new level.
Re: How a Pillar of German Banking Lost Its Way
#6I'm not too familiar with the German culture. Can someone explain to me what is this "German provincialism" that they talk about? Do Germans see themselves as provincial? Does anyone else see them as provincial?
The thesis made semiclear on Page 2 is that DB previously was staid and very German, and in what would later become their own view, behind the times.
> The bank's German clients were increasingly discovering the enterprising nature of international financial institutions and Deutsche had to be careful not to be left behind.
This is expounded on Page 2, but basically it led to global expansion of the bank in search of growth beyond what was possible with boring old German domestic banking.
Re: How a Pillar of German Banking Lost Its Way
#7I'm not too familiar with the German culture. Can someone explain to me what is this "German provincialism" that they talk about? Do Germans see themselves as provincial? Does anyone else see them as provincial?
The thesis made semiclear on Page 2 is that DB previously was staid and very German, and in what would later become their own view, behind the times. > The bank's German clients were increasingly discovering the enterprising nature of international financial institutions and Deutsche had to be careful not to be left behind. This is expounded on Page 2, but basically it led to global expansion of the bank in search of…
I shall then proceed to read page 2 :-)
Re: How a Pillar of German Banking Lost Its Way
#8I'm not too familiar with the German culture. Can someone explain to me what is this "German provincialism" that they talk about? Do Germans see themselves as provincial? Does anyone else see them as provincial?
There was a good documentary about the financial crisis and the banking crisis from the view of a former German banker called Master of the Universe [0] (has been on public television, but I was not able to find it from a quick search).
In this documentary, the banker describes how the Germans were eager to learn from the US bankers in the late eighties and early nineties and how they did not question anything, but behaved like stupid sheep, who wanted to play with the big guys. They did not understand the products at all.
The phenomenon that makes this "German provincialism" and not just provincialism is that you can see a pattern here. You can spot it in different areas: the BND and the NSA, the entertainment industry and Hollywood, politics and the US president (especially Obama).
Germans have this schizophrenic trait, that on the one hand they think the US is totally nuts with all it's guns and broken systems and on the other hand very much care what the US does and what it thinks about them.
Re: How a Pillar of German Banking Lost Its Way
#9I'm not too familiar with the German culture. Can someone explain to me what is this "German provincialism" that they talk about? Do Germans see themselves as provincial? Does anyone else see them as provincial?
This may be specific to banking, and it's a bit of a hypothesis by the authors, but here's how I understand it:
German banks have traditionally operated on the local level – mortgages, financing local businesses, sometimes a medium-sized manufacturer.
The opposite model is anglo-saxon investment banking: m&a, hedge funds, HFT, leverage.
There are cultural components to both these models as well. Under the first, a good banker spends his nights drinking too much beer with the small-town mayor.
Investment bankers spend their nights doing coke with some actress in a Hong Kong rooftop bar.
(both exaggerated for effect)
Now, the story goes, Deutsche Bank felt so inferior when they watched Wall Street that their traditional, stable business was relegated to second class. They no longer cared about the low end (everyday) market.
The two problems they ran into were (a) investment banking turned out to be a rather volatile business, and they no longer had the steady income stream to support it, and (b) they probably tried so hard play blank, without actually having the necessary structures/experience etc. Cargo-Cult investment banking basically. (Fargo-Cult?)
Re: How a Pillar of German Banking Lost Its Way
#10I'm not too familiar with the German culture. Can someone explain to me what is this "German provincialism" that they talk about? Do Germans see themselves as provincial? Does anyone else see them as provincial?
Have you ever heard of the German Mittelstand? [1] Family-owned companies, long-term and low-risk business strategies, social responsibility, regional ties... I think that's the kind of provincialism the article talks about. Not bad, just boring.
Deutsche Bank wanted to become a global player. Doing investment banking in New York and London instead of giving a small loan to Herr Müller's crankshaft oil seal factory in Hintertupfingen.