In the television series “Bad Banks” to fight two inside each other (see picture). At Deutsche Bank, the Bad Bank is blocking the view of the state of the money house.
(Photo: ZDF and Letterbox Filmproduktion)
It will resonate hope, when Deutsche Bank reported this Wednesday, on the third business quarter – to the fact that the 150-year-old money house gets better, that in the summer of 2019 initiated, but further conversion leads to success, and the Corona-crisis, the Institute halfway.
The Investment Banking? Buzzing apparently. The Shareholders? Halfway satisfied. Corona-Credit Losses? Keep yourself in limits. In addition, the leader is pleasing to the market, secretly, that the rival Commerzbank has made a leadership crisis after the ignominious years of the “Yellow” of Frankfurt-crisis Bank number one are now.
Is disturbed the Idyll, however, by a strange balance of dustbin called “Bad Bank”. Established in the summer of 2019, has sunk to the Bank where securities that were initially traded by investment bankers. Also, the share of business slumbered there. In this trash the papers are now available and should relieve the pressure on the core business. It’s not about Peanuts: In the Bad Bank hiked securities of up to 250 billion euros, which corresponds to the balance sheet of a Bank.
To bad loans specialists. You bundle them and sell the package to investors
Known, the concept of Bad Banks from the eponymous TV series, where he stands for the Poor in the financial business. In the technical language, Bad Banks for the outsourcing of bad loans as soon As banks from the burden of bad loans to be crushed, care of specialists the balance sheet of scrap metal. You bundle it, sell it to investors, freeing banks from the risks and relieve in the ideal case, your equity. For bad loans, you need to put a lot back equity. A Bad Bank is not meaningful, if the loss from this excessive total, that is, when the bottom line is still equity in the balance sheet is free.
All of this is not easy to understand, but important to know where the Deutsche Bank is really. After all, with Bad Banks, you know, in Frankfurt. There was already once such a balance sheet-trash, by 2017, has been abolished. Now he’s back and adjusted the view on the condition of the Bank. Because at the same time, the Exercise also allows for the investment banking division brighter Shine, where most of the loss-making papers come – after all, every room looks tidier, if the waste is in the bucket. And the better the investment banking world, the more bonuses can claim the investment banker.
On the other hand: So, how’s it going so far, missed the Bad Bank, apparently your official order. Because of the was not, of course, to allow bonuses for investment bankers, but equity release – which is why the Bank called the trash “Capital Release Unit”, “capital-release unit”. The word “Bad Bank” will not hear you. It is, thus, group chief Executive, Christian Sewing 2019 had said, not a scrap, but the “quality”papers with some short-term as well as to shops, the surrender, the Bank, the equities business. The sale should generate up to 2022 five billion euros of excess capital, which will be distributed to the shareholders.
Actually, the shareholders would have to go to the barricades
Just: The alleged quality papers cause gigantic losses from 2019 to 2022, if the Bad Bank is to be closed again, to enormous nine billion euros, as analysts estimate, and the Figures of the Bank to read. From a presentation by December 2019, also suggests that the “capital-release unit” consumes no additional capital, but none of “releases”, because their losses are simply so large. The Bank holds to the target, the resolution sets a five-billion capital? You stand by it to the shareholders as of 2022 five billion euros to return, a spokesman said only. The Bank then model a lower-risk business, need less capital.
Actually, the shareholders would have to go to the barricades. In fact, however, it is difficult to get an assessment – perhaps because they have been disappointed too often. Analysts from other banks shy away from, often afraid to Express themselves critically. An Anglo-Saxon Analyst who wants to remain anonymous, admits, “the market” didn’t believe the promise from the beginning; in addition, Corona and loan losses are currently more important.
Verbose Dieter Hein, a freelance Analyst and longtime connoisseur of the Bank. “It’s always the same game,” says Hein. “They push the bad business in a Bad Bank. In order for the investment banking looks good, the bonuses are saved.” The Bank says that it is standard practice to include all outstanding transactions. We are very satisfied with the resolution get.
The Bank shifts losses and costs? The Institute will not comment on
How do the losses in the Bad Bank, exactly, is to be judged from the outside, however, hardly. In presentations of the Bank notes but: Instead of being a valuable, cause the securities due to market fluctuations, the sale or by the protection of negative income cost per annum “” of 200 to 400 million euros. Add to that two to three billion euros of costs. What, exactly, is unclear, but they correspond to cost around ten percent of the Group, although the Bad Bank has just 1.4 percent of all employees. The Bank shifts losses and costs? The Institute will not comment on. A spokesman said The losses were primarily due to the sale of the assets, but mainly due to the cost of platforms, which would have to be operated.
Around a third of the Bad-Bank-balance-sheet comes from the bond trade, even today, the most important part of the investment banking business of the Bank. It is not about Legacy, but business from the years, as the Sewings predecessor John Cryan taken the lead and also a “lower-risk” business model had promised. Finally, there had been previously a Bad Bank. A spokesman declined to comment to the temporal origin of the transactions. A group Insider said: “These transactions have to be in a Bad Bank, as it is securities, not to complicated real-estate-loans, or the like. They should be handled by the responsible trader.”
Attractive that would be, of course. Finally, traders received a portion of their bonuses until later and only then be paid when a business, in retrospect, proves to be lossy. Is it so? The Bank did not want to speak to the question of whether the Bad Bank losses will be and also bonuses retained or paid back.
Also, because it is not Peanuts. Alone, 2019 still deserved 583 employees of the Bank more than a Million euros in the year. And it is also clear Buzzing in investment banking in 2020, more as in the past, will be calling the local staff, once again, a big, fat Bonus. The balance sheet of scrap metal you have in the past permitted others to take care of.