Deutsche Bank queries ECB line on bank lending help
Nov 20 Increased bank lending volumes as a result of the European Central Bank’s easy money interest rate policy may not be enough to offset the hit to margins from that policy, Deutsche Bank Co-Chief Executive Juergen Fitschen said on Friday.
“The behaviour of banks is also contributing to the dilemma we are in,” Fitschen said.
“If there would be very significant growth tomorrow in Europe, I would have serious doubts whether banks could accommodate that,” Fitschen said, because regulation was putting brakes on the provision of financial support.
“We have to be very realistic about what can be done,” he said
Remember the $75 Trillion in derivatives?
Deutsche Bank has warned it will lose more than €6bn (£4.4bn) in the third quarter in a record loss.
In a late-night announcement that shocked analysts, Germany’s biggest bank blamed huge impairment charges of €5.8bn for the unexpected losses. Forecasts had been for profits of about €1bn.
Deutsche’s new boss, John Cryan, is planning to reduce the workforce by a quarter, or 23,000 jobs, to bring costs down and avoid a fundraising from shareholders. The Postbank sale will reduce Deutsche’s workforce by 15,000, and the lender is reportedly considering cutting 8,000 additional jobs.
Announcement in FORTUNE magazine:
Germany’s Deutsche Bank warns of a record loss
All major banks have seen a drop in profitability since the financial crisis, in part because of increased regulation, but investment banking has been hit especially hard. Deutsche Bank has been one of the few large European banks to stick with investment banking at a time when the business is generating very low returns, especially in Europe.
The US Fed has called an unscheduled meeting on Monday. As in, tomorrow. They announced this Friday, and nobody really knows what they are meeting about. The announced reason is review of the advance and discount rates – presumably leading to some change. (Why have an emergency meeting to leave things more or less the same?) This could be a really big deal. The Fed doesn’t often call unscheduled meetings.
Advance rate: the size of the haircut applied to collateral (i.e. bonds) that banks who want to borrow money from the Fed.
Discount rate: interest rate charged on Fed-supplied loans.
Note there is also the Fed Funds Rate (which is a target set by the Fed and enforced by Fed open market operations), as well as the interest rate paid on Excess Reserves on deposit at the Fed.
It is anticipated that the closed meeting of the Board of Governors of the Federal Reserve System at 11:30 AM on Monday, November 23, 2015, will be held under expedited procedures, as set forth in section 26lb.7 of the Board’s Rules Regarding Public Observation of Meetings, at the Board’s offices at 20th Street and C Streets, N.W., Washington, D.C. The following items of official Board business are tentatively scheduled to be considered at that meeting.
Meeting Date: Monday, November 23, 2015
Matter(s) Considered 1. Review and determination by the Board of Governors of the advance and discount rates to be charged by the Federal Reserve Banks.
Here’s a chart comparing the Discount Rate to the Fed Funds Rate.
Deutsche Bank is headed for collapse in Germany
Is something about to happen in Germany that will shake the entire world?
According to disturbing new intel that I have received, a major financial event in Germany could be imminent.
Now when I say imminent, I do not mean to suggest that it will happen tomorrow. But I do believe that we have entered a season of time when another “Lehman Brothers moment” may occur.
Most observers tend to regard Germany as the strong hub that is holding the rest of Europe together economically, but the truth is that serious trouble is brewing under the surface. As I write this, the German DAX stock index is down close to 20 percent from the all-time high that was set back in April, and there are lots of signs of turmoil at Germany’s largest bank.
There are very few banks in the world that are more prestigious or more influential than Deutsche Bank, and it has been making headlines for all of the wrong reasons recently.
Just like we saw with Lehman Brothers, banks that are “too big to fail” don’t suddenly collapse overnight. The truth is that there are always warning signs in advance if you look closely enough.
In early 2014, shares of Deutsche Bank were trading above 50 dollars a share. Since that time, they have fallen by more than 40 percent, and they are now trading below 29 dollars a share.
It is common knowledge that the corporate culture at Deutsche Bank is deeply corrupt, and the bank has been exceedingly reckless in recent years.
If you are exceedingly reckless and you win all the time, that is okay. Unfortunately for Deutsche Bank, they have increasingly been on the losing end of things.
New York (November 20, 2015, 4:39 PM ET) — The Financial Industry Regulatory Authority on Thursday fined a Deutsche Bank securities unit $1.4 million for violating a federal rule regulating short sales, or sales of a security not owned by the seller, in addition to the agency’s own short interest reporting rule and related supervisory failures.
ECB is preparing a massive QE to save DB
ECB willing to act fast to boost inflation, Draghi says
Following Draghi’s comments the euro fell as low as $1.0664 and traded near three-month lows against sterling. It then recouped its losses to move back above $1.07.
Draghi said the strength of the euro zone’s recovery was modest and the global outlook for demand, particularly in emerging countries, had worsened significantly in recent months.
How stupid is that the Market reacts positively to the ECB hinting to more stimulus