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How a Pillar of German Banking Lost Its Way

spiegel.de

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Re: How a Pillar of German Banking Lost Its Way

#31

Post by ozim »

misja111 wrote: post #22
maxxxxx wrote: post #3

I 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.

That is true, but try telling that story to the shareholders. Most shareholders don't care about long term stability, they just want a profit this year and then cash out and move somewhere else.

Also that if you will be conservative guys with big money will go to someone who is not and is making quick money for them.

Re: How a Pillar of German Banking Lost Its Way

#32

Post by dublinclontarf »

robk wrote: post #27
tscs37 wrote: post #20

Earlier quoted context omitted.

Sadly, no. Hintertupfingen is merely a invented place which is most removed from the happenings in the rest of the world. Being from Hintertupfingen implies being somewhat of a Redneck or atleast uneducated of what happens in the world.

You're both in agreement.

Penis.

Re: How a Pillar of German Banking Lost Its Way

#33

Post by usrusr »

WalterBright wrote: post #26
misja111 wrote: post #22

Earlier quoted context omitted.

That is true, but try telling that story to the shareholders. Most shareholders don't care about long term stability, they just want a profit this year and then cash out and move somewhere else.

The stock price is set by the expectation of long term increased value, not short term. For the simple reason that if everyone is set to cash out at the peak, there won't be a peak, the stock will tank.

The stock market oracle values a dim chance for massive growth much higher than a very large likelihood of continued existence at current levels.

Overoptimistic money drives out realistic money and then suddenly the corporation has to fulfill expectations it might never have actively encouraged. Or else you lose at capitalism, whatever that means.

The only chance to not play that game is to have patient majority owners who are fully willing to ignore temporary devaluation when disillusioned optimists jump ship.

Re: How a Pillar of German Banking Lost Its Way

#34

Post by usrusr »

cnvogel wrote: post #25
allendoerfer wrote: post #8

Earlier quoted context omitted.

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 b…

The full movie can be watched on the website of the BPB[x]: http://www.bpb.de/mediathek/225092/master-of-the-universe I really like the style that the main/only actor/narrator is filmed in an abandoned former bank's office buildung. [x] The Federal Agency for Civic Education, FACE (German: Bundeszentrale für politische Bildung, bpb) is a German federal government agency responsible for promoting civic education.

I love BPB. Common sense would suggest that they must be the worst mouthpiece of government propaganda imaginable, but that expectation makes them so obscure that no political actor would ever consider it worthwhile influencing them. A very valuable arrangement, impossible to deliberately set up from scratch.

Re: How a Pillar of German Banking Lost Its Way

#35

Post by chollida1 »

blub wrote: post #24
chollida1 wrote: post #11

I think its important to note that they didn't end up this way because they were stupid or power hungry. Like alot of companies, they made decisions that made sense at the time that ended up having poor long term consequences. When they decided to really grow it was due to a couple of things.. 1) Their competitors were all doing the same thing and they almost needed to grow their investment arm and international pres…

According to the article they were both stupid and power hungry and yet you make it sound like they accidentally manipulated Libor or bet against their own clients. Should we feel pity for them or what? They could have expanded AND kept some control of what the investment bankers were doing. Other banks managed to reduce their exposure while DB was blisfully sailing ahead, so your assertion that "so is everyone else…

Wow, I don't normally respond to replies but it looks like you tried as hard as you could to take the most negative outlook possible on my post.

I mean you completely failed in any way to give my note the principle of charity. Have a look:

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

I really don't know how to respond to that:(

My point was that their transformation from a regional bank into an international bank wasn't just a power grab or kingdom building but a very natural progression, that lots of their competitors, to keep their existing customers.

it then turned out that one of their new areas, derivatives desk, was minting money like crazy so it became tougher for them to reign in that team, and as a side effect the risk that team generated, until it was painfully clear that they'd gone too far.

Their problem wasn't in the idea of growing and transforming the bank but in the implementation, and I believe I laid out in pretty easy to follow detail, why they went the way they did.

Re: How a Pillar of German Banking Lost Its Way

#36

Post by allendoerfer »

usrusr wrote: post #34
cnvogel wrote: post #25

Earlier quoted context omitted.

The full movie can be watched on the website of the BPB[x]: http://www.bpb.de/mediathek/225092/master-of-the-universe I really like the style that the main/only actor/narrator is filmed in an abandoned former bank's office buildung. [x] The Federal Agency for Civic Education, FACE (German: Bundeszentrale für politische Bildung, bpb) is a German federal government agency responsible for promoting civic education.

I love BPB. Common sense would suggest that they must be the worst mouthpiece of government propaganda imaginable, but that expectation makes them so obscure that no political actor would ever consider it worthwhile influencing them. A very valuable arrangement, impossible to deliberately set up from scratch.

They are also structured in a way, that they do not have the final say. E.g. teachers can book them. No booking, no influencing.

Re: How a Pillar of German Banking Lost Its Way

#37

Post by hackles_raised »

It was a horrible place to work.

From a technical perspective they were completely incompetent, refusing to consider that a plan put in place years before might now be invalid.

Investing in hardware and the associated data center, years before a system is due to be deployed 'because my bonus depends on it'.

Outsourcing gone mad.

Obvious quid pro quo arrangements between management and vendors.

There were good people there but they were ignored or marginalized by the Frankfurt crowd.

Most of the technical staff would not get though an intern technical interview at Apple / Google / ...

I tried to build an internal team in Cary to try and prove that outsourcing is not the answer, but it was pointless, the staff available were totally and obliviously incompetent, one of them refused to participate unless we used Erlang, I know Erlang, I really like it, so I quizzed him on why he wanted to use Erlang, you know the outcome, he had no knowledge of OTP, and only a cursory familiarity with the language, and yet I was asked to let this guy lead my development team.

Try hiring technical talent into that environment. They did pay well though.

I bailed and headed back to the valley.

Re: How a Pillar of German Banking Lost Its Way

#39

Post by WalterBright »

usrusr wrote: post #33
WalterBright wrote: post #26

Earlier quoted context omitted.

The stock price is set by the expectation of long term increased value, not short term. For the simple reason that if everyone is set to cash out at the peak, there won't be a peak, the stock will tank.

The stock market oracle values a dim chance for massive growth much higher than a very large likelihood of continued existence at current levels. Overoptimistic money drives out realistic money and then suddenly the corporation has to fulfill expectations it might never have actively encouraged. Or else you lose at capitalism, whatever that means. The only chance to not play that game is to have patient majority owne…

Riskier investments tend to have lower current values, which prices in the risk.

But for a more meta point, if you believe you are smarter at valuing stocks than the market is, then you can make a fortune at it if you are correct. Or even just mostly correct. You don't need to convince me or anyone else.

Re: How a Pillar of German Banking Lost Its Way

#40

Post by blub »

chollida1 wrote: post #35
blub wrote: post #24

Earlier quoted context omitted.

According to the article they were both stupid and power hungry and yet you make it sound like they accidentally manipulated Libor or bet against their own clients. Should we feel pity for them or what? They could have expanded AND kept some control of what the investment bankers were doing. Other banks managed to reduce their exposure while DB was blisfully sailing ahead, so your assertion that "so is everyone else…

Wow, I don't normally respond to replies but it looks like you tried as hard as you could to take the most negative outlook possible on my post. I mean you completely failed in any way to give my note the principle of charity. Have a look: https://en.wikipedia.org/wiki/Principle_of_charity I really don't know how to respond to that:( My point was that their transformation from a regional bank into an international ba…

I reread your original message and the underlying theme seems to be the inevitability of ending up more or less in a situation similar to the one of today.

I don't believe the natural progression theory fully explains what happened and I was trying to emphasise that the article contradicts your theory in several places.

In particular: * their failure to learn the lessons of 2008, which most other banks did learn.

* several power struggles for key leadership positions

* outright incompetence in risk management.

To summarise: your analysis about the forces at play is likely correct. However one needs to mix in incompetence and greed to get today's result, something which you explicitly excluded in your first sentence.

I am outraged at what happened (I am a Deutsche customer) and some of that slipped into my message. I do apologize for that.

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