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Deutsche Bank Reports Massive Loss, Will Cut 35,000 Jobs, Exit 10 Countries In Sweeping Overhaul
As we put it a few days ago while mocking Saudi Arabia’s attitude toward “collateral damage” from its bombing runs in Yemen, “you can’t make an omelette without breaking a few eggs.” Well, over at Deutsche Bank, John Cryan has been busy crushing whole cartons worth.
From sweeping job cuts, to reorganizations, to eliminating the dividend, Cryan has been a veritable wrecking ball since taking the helm from co-CEOs Anshu Jain (who is gone) and Jürgen Fitschen (who is leaving).
Just yesterday, Europe’s largest bank announced that the dividend would be scrapped as part of “Strategy 2020.” Here are some other key points from Cryan’s “plan”:
- CET 1 ratio: at least 12.5% from the end of 2018
- Leverage ratio: at least 4.5% at the end of 2018 and at least 5.0% at the end of 2020
- Return on Tangible Equity (RoTE): greater than 10% by 2018
- Adjusted Costs (total noninterest expenses excluding restructuring and severance, litigation, impairment of goodwill and intangibles and policyholder benefits and claims) of less than EUR 22.0 billion by 2018
- Cost/income ratio (CIR) of approximately 70% in 2018 and of approximately 65% in 2020
- Risk Weighted Assets (RWA) (excluding regulatory inflation following regulatory changes expected to be at least EUR 100 billion by 2019/2020) of approximately EUR 320 billion at the end of 2018 and of approximately EUR 310 billion at the end of 2020.
Well, the hits just kept coming on Thursday as Deutsche Bank made good on a promise to write down billions in assets in its investment bank and retail- and private-banking operations. The Q3 loss: €6 billion.
That’s a record, and Cryan understandably described it as “highly disappointing.” The pain was largely attributable to “impairments of goodwill and other intangibles,” or, put differently, “marking things to reality.’” As a reminder, here's what DB said earlier this month:
An impairment of all goodwill and certain intangibles in Corporate Banking & Securities (CB&S) and Private & Business Clients (PBC) of approximately EUR 5.8 billion. This is largely driven by the impact of expected higher regulatory capital requirements on the measurement of the value of these segments as well as current expectations regarding the disposal of Postbank.
And here's what the writedown looks like in the context of previous quarterly results:
So yeah, nothing good about that. Other highlights from the report: investment banking revenues were marginally higher Y/Y with fixed income holding up. Overall revenues were down 7%. Here are Goldman's summary bullets:
- FX moves aside, (i) FICC down -25% q/q and up +20% y/y – the y/y results falls from +20% to +5% y/y if we adjust for CVA gains, CVA methodology changes and FVA impact; (ii) equities fell 20% y/y (and 40% q/q); (iii) advisory -8% y/y. All-in, this is a solid result y/y, compared to reported averages thus far helped by (1) the weak Euro and (2) low base effect. We await company clarification on the composition of the FICC result.
- IB revenues up +3% y/y, with the US$ strength (~+14% vs € y/y) contributing substantially.
- Divisional PBT, on an underlying basis: (1) CB&S --45% y/y; (2) GTB +15% y/y; (3) PBC: 53%y/y ; (4) AWM:-15% y/y (5) non-core unit lost €278 mn headline
- B3 CET1 ratio up 10bps to 11.5%, this contrasts to the 11% the company expected as of October 7. This discrepancy is driven by the reversal of previous dividend accruals in line with the announced elimination of the dividend.
- Stated TBVPS fell 1%, to €38.99 putting the stock on 0.7x P/TB.
And now for the fun stuff. As part of the "new" strategy (which Morgan Stanley thinks looks a lot like the "old" strategy), the bank will exit 10 countries including Mexico, Norway and New Zealand, and move trading operations from Brazil to global and regional hubs.
Additionally, Cryan will cut a total of 35,000 jobs. As WSJ notes, "the overall head count reduction includes 9,000 full-time jobs, 6,000 external contractors and 20,000 additional roles through the disposal of assets." Deutsche will also dump a host of assets including its Postbank retail unit.
But don't worry, because as John Cryan said, "Deutsche Bank does not have a strategy problem."
That's probably true. It's hard to have a strategy "problem" when you have no strategy at all.
* * *
Bonus humor for those who know something about Austrian black swans (via Bloomberg):
- Deutsche Bank wrote up Heta Asset Resolution claim by EU24m
- Doesn’t give reason for write-up
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Huh.
losses even with QE? How is this possible with the almighty central bank interventions
It's hard to have a stragety problem when you ARE the problem.
I am going to start a hedgefund with Tyler as my frontman, have him sit on the boards....
Fairly obvious why Germany was playing hardball with Greece concerning default. Now I wonder what the mass influx of muslems will do. Get your popcorn!
A picture with the meme of Jurgen Fitschen and Anshu Jain saying "Let's get out of here. - Me first." to each other would have been appropriate.
Chimpfucking not going well?
No DB bankers need go to jail since Greece is paying for their collective sins.
Early adapters, clearly not early enough.
Yet...
Now we'll see if customer funds will be used in bail ins when their problem grows.
And it will because those suckers went all in on a crash this month.
Deutsche Bank will be the german Lehman Brothers! They are the next for the "Bank Holiday" LOL, LOL, LOL,
Already DOW going the other way. Maybe a hundred points positive.
It's never 1 banks problem, all banks are interconnected.
And as Tyler showed already a few times, DB's derivative book is bigger then the European GDP so that stuff can go nasty real quick if they want to sell crap and suddenly need to value it at bookvalue which is most likely lower then what they say it is.
It might also explain why the stockmarket is pushed up by governments to contain the damage. At all costs most probably.
Deutsche banks biggest mistake is not being an American Bank. No FED sugar daddy. Germany's available free money is limited.
Are you sure? Why do you think Germany and England are America's biggest bitch?
Sudden Debt, yes... and no. the reason is called eurodollar. but in principle I agree. who's bitch is Belgium, currently? ;-)
"Deutsche banks biggest mistake is not being an American Bank"
depends on the definition, though. DB is mostly led by Americans working in London. and don't ask what recruiting methods they used
The Fed is their sugar daddy, make no mistake about it http://www.businessweek.com/the_thread/economicsunbound/archives/2009/03/german_and_fren.html Due to the interconnectedness of deals in banking, any benifit to GS/JPM/BoA/Citi ends up in DB's pocket I think GS is retaliating against DB due to some internal conflict between them, hence all the government's looking into DB's shady deals while GS is getting ignored (Malasian slush funds, Libya, and I'm betting oil deals with ISIS, let alone from the legal tyrants in Saudia Arabia, Qatar, Brunei)
Yet they managed to get 100 cents on each shitty AIG counter party dollar from BenBerSchtupMe and Turrbo Timmy Dick Wad
Bullish
That's 35,000 more "Business advisors" added to the market.
Applications for US H1B soar./s
That's 35,000 unemployed who are freed up to help make the refugees comfortable in their new homes.
Got to love the "other" column, bet thats the column everyone overlooks?
Kinda like the FRB "other assets" column.
Can't they just "lay off" the derivatives?
what and loose a bonus or two ?
A five word reply with at least four grammatical errors -- must be a new record.
"the bank will exit 10 countries including Mexico"
Yup, that's just what the world needs: more Mexican refugees.
This is prolly the largest of the criminal co-conspirators with their estimated $100T in Off Bal Sheet Derivatives exposure. Why allow them to even try and unwind?
Trash them already and let's get on to a Bankster Hung-a-Day and eCONomic revival.
With 29,000 employees being laid off or sold, Deutsche will fire about 29.55% of it's full time staff.
29,000 is from above and 98,138 is from the 2014 balance sheet and copied here before it gets erased....or something...
In 2014, the number of staff employed on a full-time basis by Deutsche Bank Group decreased by 117 to 98,138. Adjusted for businesses acquired and sold, the number of full-time equivalent staff increased by 1,214. The regional structure of Deutsche Bank’s workforce was affected by the divestment of BHF-BANK in Germany. Excluding this effect, the percentage of the workforce employed in Germany remained broadly stable.
https://annualreport.deutsche-bank.com/2014/ar/stakeholders/staff/staff-...
And, good luck to the 6,000 contract employees who are neither here nor there....but when added up, it means 35.6% of employees shall be laid off and 10 countries will be shut down prior to Christmas!
#demanddestruction
Imagine what DB would be like if they incuded reasonable provisions for their derivative exposure.
But... But... will US banks be the only ones left to manipulate gold for the FED?
Bureau of Lies and Scams (BLS) will take the -xx,000 and make it +xx,000 US jobs for a net gain.
Have to make it look good for the upcoming election.
35000 people who executed orders from their masters. The boots in the trenches always get it first.
What percentage of their total work force is this?
About 30%.
Does anyone know if the secretary was being unduly patronizing at lunch time and the CEO, who was being hung out to dry, ordered ribs?
could be worth moar broken into pieces. somebody get icahn on the phone. /s
Poor old Douche Bank. I am so sad. :cry:
Regulations and oversite became to tight after they manipulated too many markets for gigantic profits.They got caught too many times,especially in Gold.Now the heavy penalties and fines are breaking the bank,so to speak.Add in the new criminal penalties now in New York-whoops-no more illegal manipulation-participation rackets with all your crooked buddies.One big problem left though - the huge derivatives positions outstanding that are a Euro killer.These crooks could take down everybody over there with them.Too bad it's always the ordinary working person who suffers as a result of what a bunch of F'n executive scumbag crooks have done to their workplace.They'll be vacationing on their Greek estates out on the Islands while the rest in Germany collect their unemployment cheques.Sound familiar?
Gotta fight off that pesky 70 trillion-plus EUR derivatives exposure somehow... That, and I wonder, how much exposure DB has to VW. That was a cheap political hit with over 20 billion EUR in ramifications.
Somehow the prospect of the Banksters slugging it out for survival, once the contagion starts, reminds me of Peer Gynt during the shipwreck - where he wins the struggle for control of a boat and the other man drowns. To wit (Henrik Ibsen/1876):
(Close under the land, among sunken rocks and surf. The ship sinks. The jolly-boat, with two men in her, is seen for a moment through the scud. A sea strikes her; she fills and upsets. A shriek is heard; then all is silent for a while. Shortly afterwards the boat appears floating bottom upwards.)
(Peer Gynt comes to the surface near the boat.)
PEER. Help! Help! A boat! Help! I’ll be drowned! Save me, oh Lord—as saith the text!
(Clutches hold of the boat’s keel.)
THE COOK (comes up on the other side). Oh, Lord God—for my children’s sake, have mercy! Let me reach the land!
(Seizes hold of the keel.)
PEER. Let go!
THE COOK. Let go!
PEER. I’ll strike!
THE COOK. So’ll I!
PEER. I’ll crush you down with kicks and blows! Let go your hold! She won’t float two!
THE COOK. I know it! Yield!
PEER. Yield you!
THE COOK. Oh, yes!
(They fight; one of the cook’s hands is disabled; he clings on with the other.)
PEER. Off with that hand!
THE COOK. Oh, kind sir—spare! Think of my little ones at home!
PEER. I need my life far more than you, for I am lone and childless still.
THE COOK. Let go! You’ve lived, and I am young!
PEER. Quick; haste you; sink;—you drag us down.
THE COOK. Have mercy! Yield, in heaven’s name! There’s none to miss and mourn for you— (His hand slips; he screams:) I’m drowning!
PEER (seizing him). By this wisp of hair I’ll hold you; say your Lord’s Prayer, quick!
THE COOK. I can’t remember; all turns black—
PEER. Come, the essentials in a word—!
THE COOK. Give us this day—!
PEER. Skip that part, Cook; you’ll get all you need, safe enough.
THE COOK. Give us this day—
PEER. The same old song! One sees you were a cook in life—
(The cook slips from his grasp.)
THE COOK (sinking). Give us this day our—
(Disappears.)
PEER. Amen, lad! to the last gasp you were yourself.— (Draws himself up on to the bottom of the boat.) So long as there is life (Money!!) there’s hope—
I don't get it, why do people still deposit their money into TBTF banks that are mostly insolvent and paying out billions in fines for the BS they've already done, don't people understand that those billions come from the service charges imposed on their accounts and transactions? Why aren't people moving money to smaller institutions?
Well actually they rake in billions in laundered drug money, ill-gotten political gains, bribes, etc, it could be the banks are mostly facades whose real purpose is to wash loot into legitimate appearing capital.
The fines they pay are merely an agreed upon slice of the pie, protection money if you will - that is, protection against state violence against them (prison, shutting them down by threat of force, etc) and also perhaps most importantly these fines are in reality bribes to the government for protection against the people who would otherwise string them up by the nearest lamposts.
The assets you deposit into the bank are actually inconsequential, but they let you do it because it gives the banks an air of legitimacy. Causes the sheeple to think banks are doing banking when the reality is banks are fronts for massive world wide criminal enterprise.
merkel looks away while VW and DB get raped, german people must be dumbed even more than US (if possible).. well she has the illegals to keep her happy. how germany does not burn is the question??
Don't worry. It will.
All our veneers are wearing kinda thin.
There is no tunnel vision like German tunnel vision.
Most live in apartments and have nothing to do but sit around and do 'busy work'. In turn, this means most of them are only preoccupied with work or collecting benefits and barely pay attention to the news which is already controlled. Imagine that year after year, decade after decade. They only know what they're told by those who tell them what to believe. Most don't even know Germany is the world's third largest weapons exporter, yet they pride themselves on pacificism.
It's much more complex than that, but it's a good general feel for the atmosphere right now.
Honestly, German society is one hell of a great society. They're the most innovative, focused and forward thinking civilization Earth has ever seen. There really are... but it would be so much better if they would ihren Tunnelblick verlassen.
If anyone wants to gain great insight on Frau Merkel, read ""Das erste Leben der Angela M."... "The First Life of Angela M.," in English. Not sure if there's an English version, either.
Not realy. The life in Germany is going as usuall. There's no shortage of food, money and entertainment therefore there's no need for revolution. As long as the German bellies and bank accounts will remain full there won't be any kind of action against the establisment at all.
How about housing? Has there been a noticeable disruption in housing supply or redistribution of public housing?
DB CEO came out and said, "everything is fine ..." ... so ... it's all good.
https://www.youtube.com/watch?v=VlVmdGiAH2A
HSBC redux, and they weren't even laundering drug money.
Well, maybe not.
Unequivocally bullish for sure.
If you look over the financial statement you'll see the real problem was 2 billion Euro write-off for nail guns.
they will need to start buying Chinese Nail guns, which it turns out don't shoot nails, but paint them instead.
the bankers are dead, they just don't know it, who needs bankers when you don't have an economy anymore?
Deutsche Bank is a primary dealer bank for the Fed. I'm sure they will be wired some electronic money created out of thin air.
China is a primary dealer, too. just saying. btw, it's for the US Treasury, isn't it?
"Will Cut 35,000 Jobs"
You gotta do what you gotta do, in order to protect those top tier bonuses!
I see they're getting out of commodity exporting markets---the ones that actually stand a chance of recovering once the House of Saud is driven from Riyadh and Saudi manipulation of the oil market ceases.
Buying dear, selling cheap. Might want to review that business model, John.
It almost sounds like they want to save the bank. Well, if that's the case, here comes the pain.
Lehman 2.0
How much did DB's stock rise on this news?
it the derivative dirigible casting its shadow
DB really has managed only the numbers and not the business underneath for the past two decades. It is not refreashing to see nothing will change.
Boom & Bust
Go to dust euroPeons
inevitable fate
Make my day. I have been writing since the days when their ex CEO Jain and Cronies bs about DB's global strategy and footprint. They had been at best second tier extending beyond their competencies to compete with the likes of GS and UBS (in welath management). Even if the post 2008 crisis has been benign for them to survive their pretensions, it is no secret that the culture of croynism is so embedded that talent recruitment is a joke. (Only perhaps the German taxpayers are blind to their pyramids and labyrinths of self feeds for a tribe).
Even a novice trader in money centers know their kegs of dynamites i.e. their derivatives book and eat their lunches. What tops it all is their remarkable ability to convince the many preys that they have wealth management products and talents. When the tide was high, they just lowered the nets for the inevitable catches.
It certainly takes a long time for BS to surface and DB should be a zombie today. The cuts and exits are just their usual pretentiions that they still have a strategy. Of course, there are still committted compensations to be distributed to the priveleged tribe within so they play their investors and customers as long as they can.