0H7D.IL - DEUTSCHE BANK AG DEUTSCHE BANK
| Previous close | 8.36 |
| Open | 8.50 |
| Bid | 8.60 x 0 |
| Ask | 8.77 x 0 |
| Day's range | 8.43 - 8.76 |
| 52-week range | 4.47 - 10.37 |
| Volume | 1,106,093 |
| Avg. volume | 4,260,435 |
| Market cap | N/A |
| Beta (5Y monthly) | N/A |
| PE ratio (TTM) | N/A |
| EPS (TTM) | N/A |
| Earnings date | N/A |
| Forward dividend & yield | N/A (N/A) |
| Ex-dividend date | N/A |
| 1y target est | N/A |
- Bloomberg
SoftBank Hands New Roles to Two Vision Fund Managing Partners
(Bloomberg) -- SoftBank Group Corp. has named Akshay Naheta senior vice president, moving the Vision Fund managing partner to a new role as the company looks for ways to improve its governance and stem losses, according to people familiar with the matter.Abu Dhabi-based Naheta will assist SoftBank founder and Chief Executive Officer Masayoshi Son in managing the conglomerate’s investments function and will provide strategic advice to its global management team, said some of the people, who asked not to be identified because the appointment isn’t yet public. Naheta will start his new role in June, one of them said.Another Vision Fund managing partner, Tokyo-based Kentaro Matsui, will transition to a senior advisory role at SoftBank Group, one of the people said. The moves were mutual decisions and part of an effort to refine the originally $100 billion fund’s operating model, the person added. Both Matsui and Naheta -- whose previous roles were focused on Asia and the Europe, Middle East and Africa regions, respectively -- are expected to continue to work on select Vision Fund activities.A spokeswoman for SoftBank and a spokesman for SoftBank’s Vision Fund declined to comment. The senior vice president title at SoftBank Group is held by the likes of its chief financial officer and chief legal officer.The executive reshuffle signals a heightened focus on SoftBank’s senior ranks in a period of turbulence for the Japanese conglomerate. The company reported the biggest annual loss in its history this month as Vision Fund portfolio companies lost value, and it’s been facing pressure from hedge fund Elliott Management Corp. to bolster governance and buy back stock.Read more: SoftBank’s Masa-Misra Partnership Strained by Losses, InfightingNaheta, who oversaw investments in the likes of chip designer Nvidia Corp., pharmaceutical company Roivant Sciences Ltd. and German online car trader Auto1, is close to Middle Eastern investor Mubadala Investment Co. and had been working on raising funds for a second Vision Fund, according to a person familiar with the matter.Matsui, who focused on investments in China, oversaw the Vision Fund’s bets on companies including Full Truck Alliance and Ping An Good Doctor.Potential LayoffsSoftBank’s Vision Fund is weighing job cuts that could affect about 10% of the company’s workforce after reporting about $18 billion in losses from the declining value of its startups, people familiar with the matter have said. In recent weeks, a separate SoftBank unit, SoftBank Group International, cut roughly 10% of staff.SoftBank earlier this month said it plans to spend as much as 500 billion yen ($4.6 billion) to buy back shares through next March, on top of an existing repurchase plan of the same size. The conglomerate is accelerating efforts to raise cash and is closing in on a deal to sell about $20 billion of its stock in T-Mobile US Inc., people familiar with the matter said previously.Before joining the Vision Fund, Naheta was managing partner of investment firm Knight Assets & Co. and head of principal strategies at Deutsche Bank AG. Matsui previously worked for Mizuho Securities Co. where he advised on some of SoftBank’s largest bets, including Arm, Vodafone Japan and Sprint.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
- Bloomberg
China Isn’t Using Its Currency as a Cold War Weapon
(Bloomberg Opinion) -- The deterioration of U.S.-China relations is fast and furious, with Washington throwing out accusations of unfair trade practices, unlawful technology transfer and an early cover-up of the coronavirus outbreak, which has claimed over 100,000 American lives. The Chinese yuan, this year’s beacon of stability, is now is now at risk of tumbling like other emerging markets currencies.On Wednesday, the offshore yuan, which trades freely, flirted with its weakest level on record, dropping as much as 0.7% to 7.1965. While Thursday morning’s yuan fix came in stronger than expected, the overall sentiment is downbeat.It’s tempting to theorize that a weaker yuan could become a powerful weapon in the new Cold War, yet there’s little evidence of foul play from the People’s Bank of China. Since mid-2017, the central bank has based its fixing on the previous day’s close, dollar movement overnight against a currency basket, and what it calls the “countercyclical factor," a catch-all metric that grants wiggle room to deviate from market fundamentals. The yuan can move in a 2% trading range around the PBOC’s daily target.Take a look at Goldman Sachs Group Inc.'s estimate of the countercyclical factor. Over the last year, the PBOC has been consistently guiding its yuan stronger, not weaker, to artificially track the dollar. For all the theatrics of getting labeled a currency manipulator, Beijing wasn’t making its exports any cheaper.What’s new this year is the PBOC’s Zen-like attitude. Rather than playing the heroic fireman, handling one crisis after another, the central bank has been largely hands-off. It has used the countercyclical factor in a meaningful way only twice since January, on Feb. 4 when China emerged from the Lunar New Year holiday to face a national lockdown, and at the end of March when the outbreak was shaking up global markets.And why should the PBOC adhere to the dollar anyway? The coronavirus downturn has only showcased America’s exceptionalism — it prints the world’s reserve currency. Haven demand for the dollar has surged, evidenced by soaring currency swap rates from the euro zone to South Korea, and the Federal Reserve’s scramble to re-establish swap lines with other central banks. Looking back to 2008, the greenback only started to weaken two months after demand for “emergency dollars” peaked, data provided by Deutsche Bank AG show.So it makes sense for China to adopt a more enlightened approach, allowing the yuan to weaken during periods of dollar strength, and catch up when global tensions recede. From the PBOC’s view, the trade-weighted yuan is certainly stronger now than it was last fall, when the central bank was in fire-fighting mode. China doesn’t want to spend another $1 trillion of its foreign reserves defending its currency. The rapid drawdown in 2015 and 2016 traumatized the Chinese for good.To be sure, the pressure of capital outflows is still there. Just look at the consistent negative value of the “net error and omissions” figures in China’s balance of payment data. However, here’s the beauty of the virus: The Chinese can’t go anywhere. They can’t come to Hong Kong to buy insurance products, and unless you’re ultra-rich (with private bankers around the world apartment-hunting for you), Manhattan real estate is off-limits. The PBOC has less to worry about than before.So now the market can test the true value of the yuan. It could easily drop below 7.30 if the phase one trade deal breaks down and the Trump administration imposes some of the tariffs it had previously threatened, estimates HSBC Holdings Plc.Long-time China bear Kyle Bass abandoned his yuan short in early 2019 for the greenback-pegged Hong Kong dollar. He didn’t profit from his yuan trade because the PBOC established powerful tools, such as selling yuan-denominated bills in the offshore market, to kill anyone betting against the currency. Now that their interests are becoming aligned, it’s time for the bears to wake up.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Shuli Ren is a Bloomberg Opinion columnist covering Asian markets. She previously wrote on markets for Barron's, following a career as an investment banker, and is a CFA charterholder.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
- Bloomberg
SoftBank’s Vision Fund Is Planning to Cut 10% of Staff
(Bloomberg) -- SoftBank Group Corp.’s Vision Fund is planning deep cuts in staffing after reporting about $18 billion in losses from the declining value of its startups, according to people familiar with the matter.The reductions could affect about 10% of the fund’s workforce of roughly 500, said two of the people, who asked not to be identified discussing personnel decisions. The Vision Fund’s headquarters are in London, with additional operations in Tokyo and California. The cuts will be across all levels of staff, said one person.A spokesman for the Vision Fund declined to comment.SoftBank founder Masayoshi Son and his $100 billion Vision Fund changed the tech industry by handing out enormous checks to relatively unproven startups. But the fund went from SoftBank’s main profit contributor a year ago to its biggest drag on earnings. It lost 1.9 trillion yen ($17.7 billion) last fiscal year after writing down the value of investments, including WeWork and Uber Technologies Inc.Son originally said he hoped to raise a new Vision Fund every two to three years, but he has conceded he can’t attract money now because of the poor performance. The fund, led by Rajeev Misra, operates as a SoftBank affiliate with most of the money coming from limited partners, led by Saudi Arabia’s Public Investment Fund and Abu Dhabi’s Mubadala Investment Co.“It makes sense that SoftBank is cutting positions at the Vision Fund as they are in an extremely difficult situation, and they may start targeting highly paid workers to cut costs,” said Koji Hirai, head of M&A advisory firm Kachitas Corp. in Tokyo.The Vision Fund grew rapidly after launch three years ago as Misra recruited scores of people from the finance industry, including many of his former colleagues from Deutsche Bank. Among its managing partners are several of the German bank’s ex-employees, including Colin Fan, former co-head of its investment banking division.The fund also set up an unusual compensation structure that includes a $5 billion loan to employees. The debt is swapped for equity in the fund and generates profit when deals make money -- and losses when they don’t, scaled by seniority, people familiar with the matter have said. The poor performance so far, along with the layoffs, may prompt some employees to look for other positions.“One side effect is that the best people at SoftBank may exit to find better funds,” said Hirai. “If so, their fund business may become even worse, sliding down from a slope.”The Vision Fund has struggled since WeWork botched its efforts to go public last year and SoftBank stepped in to bail the company out. The Vision Fund currently manages more than 80 portfolio companies, but Son expects about 15 of the fund’s startups will likely go bankrupt while predicting another 15 will thrive.“Vision Fund’s results are not something to be proud of,” Son said earlier this month as he announced record losses. “If the results are bad, you can’t raise money from investors. Things aren’t good, that’s why we are investing with our own money.”The fund has already unwound some investments, including selling a nearly 50% stake in dog-walking startup Wag Labs back to the company last year. Son has said he plans to sell off about $42 billion in assets to finance stock buybacks and pay down debt.SoftBank disclosed it’s unloading some shares in Alibaba Group Holding Ltd. and is in talks to sell about $20 billion of T-Mobile US Inc., Bloomberg News reported. It’s also exploring a deal for its minority stake in industrial software maker OSIsoft LLC that could be worth $1.5 billion.SoftBank shares, after plummeting in March, have recovered and are little changed for the year. The stock rose just more than 1% in Tokyo trading.One emerging question is how Alibaba -- SoftBank’s most valuable holding -- will be affected by the clash between the U.S. and China. A bill just approved by the U.S. Senate could force Chinese companies like Alibaba to stop trading their shares on U.S. exchanges.“The big picture is SoftBank is caught up with U.S.-China conflict right now, and SoftBank may need to conduct a drastic restructuring if Alibaba was delisted from New York,” said Hirai. “Its main banks and the capital markets are anxiously awaiting an outcome for the situation.”(Updates with additional details starting in the first paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
- Bloomberg
CoCo Bond Investors Face a Covid-19 Reckoning
(Bloomberg Opinion) -- The Covid-19 pandemic is even starting to affect the highly specialized world of bank capital.Lloyds Banking Group Plc, a large British lender, has just become the third European bank this year to do what was once unthinkable and decline to redeem an outstanding “CoCo” bond at its first call date. This form of hybrid debt — also known as additional tier 1 (or AT1) regulatory capital — is especially risky because the investor bears the losses if the bank fails, and it usually pays a generous interest rate.Because of their special status, there had always been a tacit understanding — though not a legal obligation — that investors would be able to cash in the bonds at the first redemption date, if they so chose, at least with European CoCos. But that tradition looks to be well and truly over among the stronger banks.Lloyds cited “extraordinary market challenges presented by Covid-19” as the reason to extend its own AT1s. With its dividend payments to equity holders suspended currently at the behest of the U.K. financial regulator, because of the coronavirus crisis, it would have looked rum indeed if the bank had cut its equity capital for the benefit of a small group of bondholders. This select bunch ought to have known the risk.The financial savings for Lloyds are just as relevant. By retaining the 6.375% 750 million-euro ($824 million) CoCo, it will switch to paying a floating coupon just above 5%. If it had redeemed the AT1 and issued a replacement bond, it would have had to offer a higher coupon to reflect the current market, probably one above 7%.Lloyds has a solid Tier 1 capital base of 16.9%, so in normal times it would have been expected to keep its bond investors happy. But regulatory pressure and the increase in yields on risky debt during the current crisis has forced even the better capitalized banks to prioritize their financing costs.Spain’s Banco Santander SA set the precedent last year of a blue-chip lender not redeeming its AT1 debt out of pure economic self-interest. That’s standard practice in the U.S. market, but Santander’s action caused a storm here in Europe. Germany’s Deutsche Bank AG and Aareal Bank AG have also skipped calls this year.This Americanization of the European CoCo market looks like a trend. ABN Amro Bank NV and Royal Bank of Scotland Group Plc both have AT1 bonds with calls due this summer, and Barclays Plc is due later in the year. They may follow the Lloyds example and retain cheap AT1 capital raised at lower yields.Banks have benefited hugely from AT1 issues as regulators count it as permanent equity (although it was almost always redeemed), meaning it counts toward capital buffers. And the cost is much lower for the issuer than true perpetual debt. Investors have been happy to play along as the yields far exceed those on bank debt with legally enforceable redemption dates.The Lloyds move is a wake-up call for AT1 investors.While the bigger banks’ CoCo bonds will probably still be popular, even if the call date is no longer guaranteed implicitly, the change might do more damage to weaker lenders. If investors no longer feel confident that their money will automatically be returned at the first redemption date, they’ll demand a higher return for the risk.The CoCo market only reopened tentatively this month with a new Bank of Ireland Group Plc deal. The Irish lender did what Lloyds refused to do and redeemed its existing AT1 and reissued at a higher cost. At least it managed to keep its investors happy and on board.This new separation between large stable banks being able to act according to their own economic advantage, while smaller rivals have to offer chunkier premiums, is a worry for the health of the financial system. It ought to be an urgent matter for consideration by European regulators. Forcing the strong banks to keep capital has consequences for their less illustrious peers. This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Marcus Ashworth is a Bloomberg Opinion columnist covering European markets. He spent three decades in the banking industry, most recently as chief markets strategist at Haitong Securities in London.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
- Bloomberg
Bank Stocks Are Either Cheap or Signal More Pain
(Bloomberg Opinion) -- Something strange happened in the U.S. stock market on Tuesday.No, it wasn’t that the S&P 500 crossed 3,000 for the first time in almost three months, generating a yelp of joy from the White House and groans from Wall Street veterans who remain perplexed at the seeming disconnect between financial markets and the American economy.Rather, the most unusual part of the latest rally is that bank shares clearly led the advance. As of last week, Bloomberg’s 18-company S&P 500 Banks Index was down more than 40% in 2020, trailing the broader stock market by an almost unprecedented degree since the coronavirus pandemic shut down the world’s largest economy. However, the index soared 9% on Tuesday, far and away a bigger gain than any of the other 23 industry groups. A simple ratio of this bank index to the broad S&P 500 shows the extent to which financials have been beaten down so far in 2020 relative to other segments of the stock market. The gauge fell on May 13 to a level seen only twice before in data going back three decades, both in March 2009. The banks swiftly rebounded in the following months as the U.S. recession officially drew to a close in June of that year.As investors weigh the drastic gains on Wall Street against the backdrop of widespread unemployment and shuttered small businesses on Main Street, the performance of bank stocks may prove to be a crucial barometer of whether markets can sustain their exuberance. Few analysts dispute that shares of financial companies are cheap on a relative basis — but sometimes prices are depressed for good reasons. Inexpensiveness alone isn’t a compelling enough reason to expect banks to bounce back as they did in 2009. Instead, perhaps more than any other industry, a lasting rally will come down to investors’ conviction in a sharp and sustained economic recovery.Investors have a few obvious reasons to be wary of U.S. banks. For one, long-term interest rates are near record lows while traders have started to wager on negative short-term rates, even as Federal Reserve officials repeatedly question the policy. All this points to lower net interest income, a crucial metric that reflects the spread between what a company earns on its loans and what it pays on its deposits. Meanwhile, large banks have already halted share buybacks, and minutes from April’s Federal Open Market Committee meeting revealed that policy makers are debating whether they should also restrict their ability to pay dividends to shareholders during the pandemic.Whether those downsides merit a $1 trillion wipeout, akin to the 2008 financial crisis, is not so clear cut. As Bloomberg News’s Lu Wang and Felice Maranz reported, at that time the financial industry’s earnings worsened for eight consecutive quarters, but analysts only expect profit declines to last half as long this time around. Banks are broadly considered to be well capitalized — certainly much more than they were 12 years ago when they had to be bailed out by the government. JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon expressed confidence in mid-April, when the outlook was even more uncertain than today, that the biggest U.S. bank can handle “really adverse consequences.” He said on Tuesday that the U.S. could see a “fairly rapid recovery.”“The government has been pretty responsive, large companies have the wherewithal, hopefully we’re keeping the small ones alive,” he said at a virtual conference hosted by Deutsche Bank AG.It’s far too soon to declare an “all clear” on the economy, but it’s starting to look as if actions from the Fed and Congress at least helped the U.S. clear the low bar of avoiding the worst-case scenario. The numbers are still awful, especially when it comes to unemployment, but data released Tuesday showed an unexpected increase in new-home sales in April compared with those a month earlier. Broadly, Citigroup Inc.’s economic surprise index is off its lows, indicating that recent figures aren’t quite as bad as analysts expected.“The economic data have been so darn grim lately with job losses in the tens of millions that the green shoots of optimism from better consumer confidence and new home sales are welcome,” Chris Rupkey, chief financial economist at MUFG Union Bank NA, wrote on Tuesday. “We still can’t see a V-shaped recovery, but at least this is looking like the shortest recession in history which will be measured in months not years.”If that’s the case, investors will likely look back on the past few weeks as a time when bank stocks became far too cheap compared with other parts of the market. Yet Tuesday’s seemingly huge rally still leaves financial companies worth far less than before the pandemic, and it seems reasonable to expect they’ll remain that way for a while. After all, it’s anyone’s guess just how many loans will end up going bad and saddle banks with losses. There are far more moving parts to JPMorgan’s bottom line than that of, say, Netflix Inc., which fell 3% on Tuesday, the most in almost a month.It’s never a good idea to read too much into one optimistic trading day, especially coming out of a U.S. holiday weekend in which many Americans probably got a taste of “normal” pre-pandemic activities. But on its face, Tuesday looks as if it could be something of a turning point for bank shares. The follow-through will indicate if they were just too cheap to pass up, or if the economy truly is on the mend.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Brian Chappatta is a Bloomberg Opinion columnist covering debt markets. He previously covered bonds for Bloomberg News. He is also a CFA charterholder.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
- Reuters
Markets too optimistic about coronavirus recovery - Deutsche Bank CEO
Deutsche Bank chief executive Christian Sewing said on Tuesday that markets were too optimistic in their assessment of a recovery from the coronavirus crisis. It's a bearish statement from one of Europe's top bankers as key stock indexes have continue their climb from their lows in March. Sewing, speaking to investors attending an online conference, said that the real economic consequences of the crisis are still uncertain despite an ongoing market recovery.
- Bloomberg
Deutsche Bank CEO Says Trading Momentum Continued in May
(Bloomberg) -- Christian Sewing has a bullish message for anyone doubting how his beleaguered Deutsche Bank AG will come through coronavirus crisis.The chief executive officer said on Tuesday that the positive momentum enjoyed by the big fixed-income trading unit in the first quarter carried over into April and May. At home, Deutsche Bank is benefiting as corporations who want access to the giant government aid package are turning to Germany’s biggest lender as their middleman. And despite the crisis, he has no intention of slowing down cost reductions.The comments sent shares of the lender higher, while raising the bar for the CEO to deliver when he presents second-quarter earnings. Sewing, speaking at the bank’s global financial services conference, said the crisis validates his decision to reduce risk, exit equities trading and focus on the businesses where Deutsche Bank has a leading position.Analysts, who have seen a succession of Deutsche Bank CEOs overpromising and underdelivering, so far don’t share his optimism. Not a single one forecasts Deutsche Bank to reach an 8% return of tangible equity in 2022, a target Sewing reiterated on Tuesday. Several have said that Deutsche Bank’s credit provisions in the first quarter may prove too low as peers in other countries put aside much higher amounts of money.Government ProgramSewing addressed those concerns, saying that the bank’s credit quality is strong compared with competitors, not least because of its conservative lending practices in the past and high exposure to Germany, where government aid has been particularly strong. Deutsche Bank’s credit provisions will likely continue to rise in the second quarter but still stay below those of the competition, he said.Sewing also said Deutsche Bank was on target or ahead of its restructuring program, and that he had no intention of letting the current environment derail it. One week ago, he resumed firings that he had suspended at the height of the crisis in March.Deutsche Bank shares extended gains, rising 6.2% at 4:25 p.m. in Frankfurt. The stock is the best performer this year among the large European lenders, adding 6% after years of declines.Sewing in July presented a sweeping restructuring plan to end half a decade of consecutive losses. He pulled the bank out of equities trading, promised to cut its headcount by 18,000, and fix its deficient controls. Fixed-income trading is expected to deliver a sizable chunk of the growth planned for the bank as negative interest rates continue to erode income from lending.The trading unit posted a 13% gain in revenue in the first quarter, as unprecedented volatility led to trading bonanzas across Wall Street. The increase was less than the average at U.S. competitors.(Updates with comments on loan-loss provisions from fifth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
- Bloomberg
SoftBank’s Masa-Misra Partnership Strained by Losses, Infighting
(Bloomberg) -- In early March, before the coronavirus pandemic triggered a global economic lockdown, SoftBank Group Corp. founder Masayoshi Son paid tribute to Rajeev Misra, the man who runs his $100 billion technology investment fund. Wearing a $70 Uniqlo down jacket, the Japanese billionaire put his arm around Misra’s shoulders at a town hall meeting in San Carlos, California. He said he would never forget the help Misra provided when he was at Deutsche Bank AG more than a decade earlier and spoke of the trust and respect they had developed since, according to a summary shared internally. “We are family,” Son said. But behind the smiles and talk of kinship, another story is unfolding, one about the perplexing relationship at the top of SoftBank. The Vision Fund this week reported a loss for the latest fiscal year of $17.7 billion as it wrote down the value of portfolio companies including WeWork and Uber Technologies Inc. That triggered the biggest loss in SoftBank’s 39-year history. Its shares have been hammered as investors fret that the virus will batter the company’s holdings even more, and Son has said he will sell $42 billion in assets.Misra is at the heart of the problem in ways that go beyond how the fund’s companies are performing, people familiar with the matter say. He has come under fire for alleged efforts to tarnish internal rivals, including a previously undisclosed clash with SoftBank Chief Operating Officer Marcelo Claure. The company has acknowledged that it’s conducting an internal review. At the same time, Elliott Management Corp., the activist investment fund that built up an almost $3 billion stake in the company, has asked SoftBank to name three independent directors and create a new board committee to improve the Vision Fund’s investment process, according to correspondence reviewed by Bloomberg News.“Misra and Masa go back a long way, but gratitude should only last so long,” said Justin Tang, head of Asian research at United First Partners in Singapore. “If Misra is not the problem, he’s at least a big part of it.”The corporate intrigue involving Claure began in 2018, when the Bolivian entrepreneur was under consideration to join the Vision Fund’s board and investment committee, according to six people with first-hand knowledge of the matter and a review of emails and documents. The fund — run by Misra as an affiliate of the Japanese company — hired a Swiss firm called Heptagone to conduct a background check on Claure’s possible ties to money laundering and drug cartels, said the people, who asked for anonymity because they feared retaliation. The report cleared him, but its focus opened a rift between the two men that kept Claure off the fund’s board and solidified Misra’s control, the people said.A Vision Fund spokesman said one of the fund’s limited partners, not Misra, requested the background check and Misra wasn’t involved in determining its focus. SoftBank has been told the same thing and doesn’t have evidence otherwise, people familiar with the matter say. But current and former executives across the SoftBank empire remain convinced that Misra played a role since the report was commissioned by his team and follows a pattern of similar accusations about undermining internal rivals. In March, days after the Wall Street Journal reported that Misra had allegedly orchestrated a campaign to sabotage two former SoftBank executives beginning in 2015, Son ducked questions about the story from investors at a meeting at the Lotte New York Palace hotel, according to two people who were present. One of them, a SoftBank shareholder, told Bloomberg News afterward that the company needs a Vision Fund leader more focused on tight operations than turf battles. Son has remained steadfast in his support. “Rajeev has been instrumental in the company’s growth and success,” Son said in a statement to Bloomberg. “He’s also been a very trusted senior executive and friend, and will continue to have my full support and confidence.” The Vision Fund spokesman denied that Misra was involved in any campaigns to undermine company executives. “The claims underpinning this story are untrue, and have been fully denied,” he said.But some SoftBank insiders are wondering how Misra has managed to survive. It may be, they said, that Son needs his financial expertise to navigate the next few months of asset sales, share buybacks and loan repayments as the coronavirus weakens portfolio companies, hurting SoftBank’s ability to borrow. Misra helped Son finance difficult deals before joining the company in 2014 and played a crucial role in raising capital for the Vision Fund. He has also established his own power base at the fund’s London headquarters, surrounded by a coterie of former Deutsche Bank colleagues.Still, there are long-term risks for Son in tolerating what many see as a divisive culture and chaotic infighting that have plagued the Vision Fund since its inception. “Misra personifies what Vision Fund is about — a bunch of dealmakers obsessed with leverage who have no business running a venture capital fund,” said Amir Anvarzadeh, a market strategist at Asymmetric Advisors in Singapore, who has been covering the company since it went public in 1994. “But it would be naïve to put all of their problems at Misra’s feet. Son has the ultimate word.” Son and Misra share a bond as outsiders who left their native lands to study abroad and ended up finding wealth and prestige. Son, 62, went to the University of California, Berkeley and launched businesses in the U.S. before founding SoftBank in Japan in 1981. Misra, 58 and born in India, earned degrees from the University of Pennsylvania and the Massachusetts Institute of Technology before embarking on a career in banking at Merrill Lynch.But while Son never worked for anyone else, Misra always operated within large organizations, navigating their power structures. He moved to Deutsche Bank in 1997, where he eventually became global head of credit trading, turning it into one of the biggest traders of credit-default swaps — instruments at the heart of the 2008 financial crisis. One of his traders, Greg Lippmann, featured in Michael Lewis’s The Big Short, bet on a crash in the U.S. housing market, even as Deutsche Bank was a leading player in creating and selling mortgage-backed securities to investors. With slicked-back hair and a thicket of woven bracelets around his wrist, Misra speaks with an intimacy that suggests he’s confiding in a listener as he races from one subject to the next with a burning urgency. He wears his eccentricities proudly: He often padded around the office in stockinged feet, incessantly smoking, vaping or chewing nicotine gum.Misra joined SoftBank after stints at UBS Group AG and Fortress Investment Group. He started as head of strategic finance, reporting directly to Son, but his connections to the boss preceded his appointment. In 2006, Deutsche Bank helped SoftBank finance the acquisition of the Japanese wireless operations of Vodafone Group Plc, one of the most consequential deals of Son’s career. The $15 billion purchase was the largest leveraged buyout ever in Asia at the time and faced skepticism because Vodafone had struggled against the country’s top wireless players. Son succeeded in turning the business into a viable competitor, in part by persuading Steve Jobs to give him exclusive rights to the iPhone in Japan, and completing SoftBank’s transformation from software distributor to telecom conglomerate.Misra proved his worth at SoftBank as well. Son had acquired the troubled No. 3 wireless operator in the U.S., Sprint Corp., but the turnaround had proven far more difficult than the one at Vodafone. Misra put together a novel loan package secured by Sprint’s wireless licenses that helped it avoid bankruptcy.From the start, Misra clashed with Nikesh Arora, a hotshot former Google executive Son recruited in 2014 to oversee SoftBank’s startup investing, according to people with direct knowledge of their relationship. Arora would openly question Misra’s judgment, even on financial issues, leaving him fuming, the people said.In early 2015, Misra set out to undermine Arora and one of his allies at SoftBank, Alok Sama, the Wall Street Journal reported in February. The newspaper said Misra worked through intermediaries to plant negative stories about the executives, concocted a shareholder campaign against them and attempted unsuccessfully to lure Arora into a sexual tryst. “These are old allegations which contain a series of falsehoods that have been consistently denied,” a spokesman for Misra told Bloomberg News, adding that Misra thinks highly of Arora and that the two men worked together productively on many deals. “Mr. Misra did not orchestrate a campaign against his former colleagues.” A spokesman for the Wall Street Journal said the paper stands by its reporting.Arora was cleared of wrongdoing by SoftBank, but he left in 2016 and is now chief executive officer of Palo Alto Networks Inc. Sama, who had been in charge of SoftBank’s investments and inked many of its early startup deals, seemed a logical candidate to play a leading role at the Vision Fund. But some of the limited partners expressed reservations about him, people familiar with the matter said. Arora didn’t respond to requests for comment, and an attorney for Sama declined to comment.Meanwhile, Misra solidified his ties to Son. He spent time in Tokyo in early 2017 as Son worked on the acquisition of Fortress. He also used his former Deutsche Bank connections to help close a deal for Saudi Arabia’s Public Investment Fund to become the Vision Fund’s cornerstone investor, chipping in $45 billion, almost half of the capital. That May, Misra was named head of the Vision Fund. The clash with Claure began after Sama was sidelined, according to SoftBank executives familiar with the matter. Son hit it off with Claure in 2013, when SoftBank took a majority stake in Brightstar, a Miami-based mobile phone distributor he founded that became one of Latin America’s fastest-growing startups. The 6-foot-6 executive quickly demonstrated how SoftBank could save millions on its purchases, winning respect from his new boss. A year later, Son tapped him to replace Sprint’s CEO. Claure made enough progress fixing the wireless operator that Son rewarded him with a seat on SoftBank’s board in 2017 and named him chief operating officer the following year. Then, Son gave Claure a new challenge: building teams in government affairs, legal services and operations to support the company’s expanding portfolio. Part of the mission was to assemble and lead a task force that would help startups fine-tune their strategies to improve execution and speed their path to profitability. The mandate would place him at the center of the action as SoftBank transformed itself into a technology investment conglomerate. It also apparently put Claure on a collision course with Misra.The first hint that this might not be a typical corporate rivalry came months before the Heptagone investigation, according to a person close to Claure. In the summer of 2018, Stephen Bye, a former Sprint executive, reached out to Claure with unsettling news. Bye, Sprint’s chief technology officer until 2015, was approached by a private investigator trying to dig up dirt on his former boss, the person said. Bye declined to talk to the investigator and immediately called Claure. Claure, 49, was used to people poking into his past because he was often approached about joining corporate boards. But he had also heard speculation about Misra’s role in the campaigns against Arora and Sama, and he expressed concern that he was next, the person said. The Vision Fund spokesman said neither Misra nor anyone else from the fund was involved in the approach to Claure’s former employee. Bye declined to comment.In October 2018, after the murder of Washington Post columnist Jamal Khashoggi at the hands of Saudi agents, Son and Misra traveled to Riyadh to meet with officials of the sovereign wealth fund, their biggest investor. They made the trip during the Saudi fund’s annual investment conference, even as other global executives canceled their travel plans. While the two men didn’t attend the conference, Son met with the head of the Public Investment Fund, Yasir Al-Rumayyan, and laid out the new role he envisioned for Claure. He would join the Vision Fund board and its investment committee, and manage the group of operations specialists when it was embedded within the fund, according to a proposal reviewed by Bloomberg News. The changes, if implemented, would give Claure broad authority at the fund.Later that year the Vision Fund commissioned the Heptagone report. What made it different from routine due diligence, according to the people directly involved, was that the sleuths were asked to answer three specific questions: Was Claure or any company under his control ever involved in money laundering, tax evasion or fraud? Was he ever in a relationship with individuals charged with or convicted of money laundering, drug trafficking or other crimes? Had he been convicted of a crime in the U.S. or elsewhere? Claure’s company, Brightstar, generated enormous amounts of cash selling used phones in Latin America in the 1990s, exactly the kind of business that could be used for money laundering, Heptagone’s report said. But the report found no evidence Brightstar or Claure were involved in such activities, people who saw it said.Heptagone went on to say that Claure had a long-standing friendship with Carlos Becerra, a San Diego businessman whose name had appeared in U.S. Drug Enforcement Agency reports for possible involvement in cocaine distribution and money laundering. After Becerra sold a unit of his company to Brightstar, in 2007, the two men remained friendly. A photo on Becerra’s Instagram account from June 2015 showed him posing on a boat dock with Claure. Becerra, who hadn’t been charged with a drug-related crime, told Bloomberg News that his relationship with Claure was cordial, not close. He denied any involvement in money laundering or drug dealing and said he has held a California liquor license since 2001, which requires a background check and isn’t available to anyone with a criminal record. The closest Claure came to a crime, the Heptagone report found, was his involvement in a Miami bar fight in the 1990s in which no one was hurt and he wasn’t charged. Heptagone co-founder and managing partner Alexis Pfefferlé said he couldn’t confirm or deny his firm’s involvement in any report but added that Heptagone “has always been able to fully complete its assignments.”The Vision Fund spokesman said the fund often runs background checks on employees, so it wasn’t abnormal to conduct one on Claure, given his potential involvement in operations. The only thing atypical, he said, was that it came at the request of a limited partner. While the Heptagone report cleared Claure, its underlying premise appeared to be that a Latin American entrepreneur must have built his business through unsavory means, according to the people who reviewed the document. Claure was furious. He went to Son, outraged at what he saw as an attempt to damage his reputation, the people said. SoftBank took over the due diligence from the Vision Fund and gave the job to Kroll, a more established security firm, the people said. Kroll, which declined to comment, found no problems in Claure’s past. But suspicious that Misra was behind the campaign, Claure told Son he wanted no formal part of the Vision Fund, the people said. Son ultimately decided to keep the two out of each other’s way. In February 2019, about 40 employees Claure had hired were shifted over to work for Misra. Claure, who had moved his wife and four youngest daughters to Tokyo less than two months earlier, headed back to Miami. He has since helped close Sprint’s merger with T-Mobile US Inc. and is leading the effort to turn around WeWork. He also oversees a Latin American investment fund for SoftBank and co-owns a Major League Soccer team, Inter Miami, with former British star David Beckham. SoftBank denied that Claure and Misra clashed over the operations group and said both men agreed that folding it into the Vision Fund was in the best interests of the business. “While we have had our occasional differences,” Claure said in a statement, “I have a close and collaborative relationship with Rajeev, including my involvement with many of the Vision Fund’s largest portfolio companies.” The relationships Misra forged at Deutsche Bank continue to underpin his power and influence. Colin Fan, a former co-head of the investment bank, moved to SoftBank in 2017, joining more than half a dozen former bankers and traders from the German lender. But arguably the most important connection forged at Deutsche Bank is Misra’s relationship with London-based merchant bank Centricus, founded by three former Misra colleagues: Michele Faissola, Dalinc Ariburnu and Nizar Al-Bassam. The firm, originally called FAB Partners for the principals’ last names, began working with SoftBank in 2016, when Misra asked it to help find financing for the Vision Fund. Centricus advised on the creation and structure of the fund, suggested employees and helped cement the investment by the Saudi sovereign wealth fund — a deal hashed out in October of that year when Mohammed bin Salman, then the country’s deputy crown prince, met with Son in Tokyo.For its work, Centricus negotiated a payment of more than $100 million, people familiar with the arrangement said. And the fees kept coming. Centricus advised SoftBank on its $3.3 billion deal for Fortress and teamed up with Son on a failed bid to start a 24-team soccer tournament with FIFA. The firm also was brought in to help raise capital for a second Vision Fund, Bloomberg reported in mid-2019.Some SoftBank and Vision Fund executives have questioned the amount paid to Centricus, the people with knowledge of the arrangement said. Although fees for helping companies raise capital are often about 1%, making the sum paid to Centricus a good deal for SoftBank, executives critical of Misra’s leadership were piqued that the recipients were former Deutsche Bank colleagues, the people said. Centricus and SoftBank both declined to comment about fees or any other aspect of their relationship.Faissola left the firm after his connections with the Qatari government created tension with the Saudis. But Centricus hired another former Deutsche Bank colleague of Misra’s as a consultant: London-based hedge fund manager Bertrand Des Pallieres, a senior trader at the bank from 2005 to 2007 who reported directly to Misra. Des Pallieres was under consideration for a job at the Vision Fund in 2018, the people said, but that all changed after the Wall Street Journal reported that Misra had recruited Italian businessman Alessandro Benedetti to undermine Arora and Sama. Benedetti, who denied through a spokesman that he had anything to do with those efforts, was a business associate of Des Pallieres. A year later, Des Pallieres became a Centricus consultant.SoftBank’s relationship with Centricus began fraying last year, according to people familiar with the matter. Misra argued that SoftBank had no further need for the firm, as Son had developed ties of his own with MBS, the people said. And Misra had his own relationship with Al-Rumayyan, the Saudi sovereign wealth fund head. In October 2019, Misra and Son attended a party for Al-Rumayyan and MBS on a yacht in the Red Sea, people with knowledge of the event said, confirming a Wall Street Journal account.By then, SoftBank had hired Goldman Sachs Group Inc. and Cantor Fitzgerald LP to help search for new investors. Some SoftBank executives were surprised by Cantor’s involvement, as the New York-based bank had little experience sourcing investments for initiatives like the Vision Fund. But Cantor’s president since 2017 has been former Deutsche Bank co-CEO Anshu Jain, a onetime boss and childhood friend of Misra’s.The Saudis have held off committing capital to a second Vision Fund, and Son this week said he had to stop raising money because of difficulties with WeWork and other investments. SoftBank stepped in to save WeWork last year after its failed initial public offering and put Claure in charge of turning the business around. But the coronavirus pandemic has exacerbated the challenges of drawing people to co-working spaces.“Vision Fund’s results are not something to be proud of,” Son said at somber press conference in Tokyo on Monday, with reporters and analysts calling in remotely because of the pandemic. “If the results are bad, you can’t raise money from investors.”Elliott, the fund run by billionaire Paul Singer, has pressed for changes, and Misra has been involved in those talks, according to people with knowledge of the discussions. He has met frequently with Singer’s son Gordon, the people said. But two people familiar with Elliott’s operations say the firm has asked SoftBank to get to the bottom of Misra’s alleged involvement in campaigns against his colleagues and has expressed dismay at the infighting among top managers and how much of that spills into the press. A spokeswoman for Elliott denies that the company is pushing for an investigation, and a SoftBank spokesman said Son hasn’t received such a request.SoftBank’s board probed who was behind the campaigns against Arora and Sama but didn’t uncover any definitive evidence, people with knowledge of the matter said. While the company has said it’s looking into the most recent Wall Street Journal allegations, several senior executives have downplayed their significance. Ron Fisher, a SoftBank director, called the February story “another example of people anonymously spreading misinformation and innuendo about our executives,” according to an email to Vision Fund managing partners.SoftBank's board has lost several of its most independent voices in recent years, the kind of directors who could question his decisions. Shigenobu Nagamori, the outspoken founder of motor maker Nidec Corp., stepped down in 2017. Fast Retailing Co. CEO Tadashi Yanai, who had been on the board since 2001 and was a rare voice of dissent, left at the end of 2019. On the same day SoftBank announced its record losses this week, Alibaba co-founder Jack Ma announced he would leave the board too, after 13 years. Two new independent directors were nominated — Cadence Design Systems Inc. CEO Lip-Bu Tan and Waseda University professor Yuko Kawamoto.Misra’s fate is ultimately intertwined with the Vision Fund, which Son once declared would be the foundation of a new SoftBank but now risks becoming one of his worst missteps. The fund declared quarter after quarter of profit after its inception in 2017, as it marked up the value of startups and booked paper profits. But since the WeWork fiasco, it has lost all of that money and more. The structure of the fund — Misra’s invention — will create another squeeze. About $40 billion of the money raised from outside investors is in the form of preferred shares that pay about 7% a year. The idea is that SoftBank would see extra profits if the Vision Fund hit it big, but it also means losses are amplified. Venture capital funds typically don’t have such liabilities to avoid the risks of such a volatile business. Misra has been on something of a publicity tour recently to defend his reputation, although he declined to comment for this story. In an interview with CNBC published in March, he said that the Vision Fund’s mistakes are surfacing early and its portfolio will be redeemed in 18 to 24 months. “I’m so, so positive I’ll prove people wrong,” he said. He also vowed he wouldn’t leave the fund. “I owe it to my stakeholders, my LPs, my employees to be here for the journey,” he said. The Vision Fund spokesman denied Misra said the portfolio would recover that quickly. In the end, what SoftBank decides to do about Misra, if anything, depends on Son. His business is under intense pressure, putting even his deepest loyalties to the test. “At a company like SoftBank, where the founder runs the business, that person has to take responsibility for the ethics and the standards for behavior within the company,” said Parissa Haghirian, a professor of international management at Sophia University in Tokyo who specializes in Japanese corporate culture. “If you are not clear about this, then everybody sets their own rules.” For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
- Motley Fool
Why the Fed Just Reprimanded Deutsche Bank and What It Means Going Forward
News outlets are reporting that Germany's largest bank still has not corrected its internal controls related to anti-money laundering.
- Business Wire
Deutsche Bank AG Announces Automatic Acceleration of DB Crude Oil Double Short Exchange Traded Notes due June 1, 2038 (DTO)
Deutsche Bank announced today the automatic acceleration of the DB Crude Oil Double Short Exchange Traded Notes due June 1, 2038 (DTO), due to the repurchase value on May 18, 2020 being zero.
- Reuters - UK Focus
Lobby calls on EU for extra capital easing to help banks lend more
A banking lobby group called on Tuesday for the European Union to further soften a capital measure to ensure banks do not run out of headroom to help companies hit by the coronavirus crisis. The Association for Financial Markets in Europe (AFME) said the European Central Bank (ECB) has estimated that such measures will free up 120 billion euros ($131 billion) to support 1.8 trillion euros of additional lending. "The question is are these changes going to be sufficient to furnish banks with enough capacity to provide the support to their customers that is going to be needed in the coming downturn, let alone the recovery?" Michael Lever, head of prudential regulation at AFME, said in a blog post.
- Reuters - UK Focus
MIDEAST DEBT-First Abu Dhabi Bank faces pressure to redeem AT1 bonds - sources
First Abu Dhabi Bank (FAB), the UAE's largest lender, is likely to come under pressure to redeem $750 million in perpetual bonds in June, even though not calling them would be cheaper for the lender, five banking sources said. Additional Tier 1 (AT1) bonds, the riskiest debt instruments banks can issue, are designed to be perpetual in nature, but lenders can call them after a specified period. Banks have almost always exercised these "calls" at the first opportunity, but Deutsche Bank, Germany's largest lender, decided not to in March as market conditions worsened.
- Reuters
Deutsche Bank completes milestone in internal bank merger - Deputy CEO
Deutsche Bank <DBKGn.DE> over the weekend completed a milestone in the merger of its private and business clients subsidiary in Germany with the mother ship, the lender's deputy chief executive said on Monday. The step is a sign of business-as-usual and progress in the bank's restructuring at a time that the coronavirus outbreak is wreaking havoc on the global economy, disrupting operations and forcing large swathes of staff to work from home. Karl von Rohr, Deutsche's deputy, told Reuters that the bank has transferred 41,000 assets over recent weeks and adapted hundreds of documents, an effort that involved more than 600 employees.
- Yahoo Finance UK
Coronavirus: Hedge fund Elliott Management enters Virgin Atlantic bailout talks
Investment firm Elliott has been identified as a leading contender in the race to save Virgin Atlantic airline which is seeking a £500m bailout.
- Zacks
Deutsche Bank Sets Target for Sustainable Investment by 2025
Deutsche Bank's (DB) plans to launch its first-ever green bond is reflective of its efforts to meet investors' expectations, regarding the ESG space.
- Reuters
Deutsche Bank weighs sale of online bank Norisbank - source
Deutsche Bank <DBKGn.DE> is weighing the sale of its German online bank Norisbank, a person with knowledge of the matter said on Thursday. Deutsche Bank is in the midst of an overhaul that includes streamlining operations, exiting some business lines and shedding 18,000 staff. Deutsche Bank acquired it in 2006 for 420 million euros(371.65 million pounds) from DZ Bank.
- Reuters
Deutsche Bank criticised in internal N.Y. Fed audit - German newspaper
Deutsche Bank's <DBKGn.DE> regulators in the United States have criticised the German lender in an internal audit for weaknesses in fighting money laundering and in risk management, according to a German newspaper on Wednesday. The Sueddeutsche Zeitung said the bank has 90 days to respond to the audit, which was sent to Deutsche management at the end of March. Deutsche Bank declined to comment and the Federal Reserve Bank of New York didn't immediately respond to a request for comment.
- Reuters
Jersey jackpot of $2 million awaits Deutsche's lost shareholders
While Deutsche Bank <DBKGn.DE> employees fret about their jobs and pay, Germany's largest lender is trying to track down several hundred former staff to claim share payouts it has been holding in Jersey. The assets, which are in the form of stock as well as accrued dividends, have been held for years by the outpost, which was the central depository for awards for Deutsche Bank employees globally, excluding those in Germany and the United States. Jersey court documents show that over the past year Deutsche Bank has used resources including LinkedIn, 192.com, Google, and the investigative group Kroll to hunt down the ex-staffers.
- Yahoo Finance UK
Coronavirus: 'War-time level deficits' as UK faces £337bn COVID-19 bill
Deutsche Bank said the pandemic would 'permanently scar government balance sheets' as it forecast a budget deficit of 13.4% in the UK this year.
- Reuters
Deutsche Bank targets 200 billion euros of sustainable investment by 2025
German lender Deutsche Bank plans to pump at least 200 billion euros ($216.8 billion) into so-called sustainable financing and investments by 2025, its first formal targets for doing so. The money will include loans provided by the bank, bonds placed on behalf of its clients and assets managed by its private bank. The move is the latest by a leading global lender to showcase commitment to sustainable investing, as pressure builds on banks to support the globally agreed transition to a low-carbon and more environmentally friendly economy.
- Reuters
Deutsche Bank top managers to forego some pay to cut costs
Deutsche Bank's <DBKGn.DE> top managers will waive one month of fixed pay in an effort to cut costs as Germany's largest lender deals with the fall-out of the coronavirus crisis. Members of the management board as well as the bank's group management committee will be affected by the move, chief executive Christian Sewing will tell shareholders at next week's annual general meeting, according to a text of the speech published on Tuesday. "In this phase of upheaval we have to make our bank even more weatherproof - or, to be more precise, stormproof," Sewing said.
- Bloomberg
Pimco Is Managing to Do More With Less
(Bloomberg Opinion) -- The year started well for Pacific Investment Management Co., the fixed-income asset manager owned by German insurer Allianz SE. After pulling in 83 billion euros ($90 billion) of fresh cash from investors in 2019, the firm continued to attract new money in January and February. Then the global pandemic struck. Investor withdrawals equaled almost half of last year’s inflows, leaving Pimco with net outflows of 43 billion euros in the first quarter.Exhibiting masterly understatement, Chief Financial Officer Giulio Terzariol told Bloomberg Television, “March was a tough month.” Retail investors abandoned the market as the novel coronavirus threatened to trash the global economy.Beneath the headline decline in assets under management — Pimco’s worst drop in the five years since the surprise departure of bond maestro Bill Gross, as noted by my Bloomberg News colleagues — the firm’s recovery continues apace. That means Allianz will be dealing from a position of strength if it finally takes the plunge and decides to expand its asset-management business by buying a rival player. In the current beleaguered environment, the one variable that asset managers are able to control is their costs. As Pimco’s overall revenue grew by 18.4% in the year, to more than 1.3 billion euros, the firm was able to shave almost a percentage point from its cost-to-income ratio, extending a trend of parsimony that’s been in place for at least the past five years.Moreover, the margin Pimco is able to charge for managing other people’s money has been remarkably stable, particularly given the fee compression that the rest of the active management industry has endured amid increased competition from low-cost index-tracking products. While its first-quarter margin of 37.3 basis points was down a tad from December, it actually improved from 36.1 basis points in the year-earlier period.A year ago, Pimco’s parent toyed with the idea of buying DWS Group GmbH, when Deutsche Bank AG was mulling offloading its remaining 80% stake in the fund manager as part of its ultimately doomed attempt to merge with Commerzbank AG.In the end, neither transaction happened. But Allianz has given notice that it intends to be part of any industry consolidation. At some point, the German insurer might want to bolster its fund-management defenses against the rise of the index trackers by buying a specialist in passive strategies. With a market share of more than a quarter of Europe’s exchange-traded products, DWS may still prove attractive — if it ever comes up for sale.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Mark Gilbert is a Bloomberg Opinion columnist covering asset management. He previously was the London bureau chief for Bloomberg News. He is also the author of "Complicit: How Greed and Collusion Made the Credit Crisis Unstoppable."For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
- Bloomberg
U.S. Infections Rise 1.3%; Trump Touts Testing: Virus Update
(Bloomberg) -- President Donald Trump said that “we have prevailed” as U.S. deaths from the coronavirus exceeded 80,000 -- a remark he later said pertained only to testing for the infection. The White House ordered staff to wear a face mask after Vice President Mike Pence’s press secretary tested positive for the virus last week.New York state will begin to reopen in some regions on Friday, though New York City, the U.S. epicenter of the outbreak, will likely see its lockdown extended into June. Wuhan, where the epidemic began, reported its first new infections since the Chinese city ended its lockdown last month.Russia reported a record number of new cases in one day as it emerged as a new hub of the outbreak in Europe, though the spread slowed elsewhere on the continent. France, Switzerland and Greece are loosening restrictions. The U.K. outlined a plan to ease the country’s lockdown in phases, as its premier urged Britons to prepare for a new normal.Key Developments:Virus Tracker: Cases top 4.1 million; deaths exceed 284,000NYC had 24,172 excess deaths as outbreak acceleratedInfections near meat plants twice U.S. rate after Trump orderSleuthing at funeral parlors to track nursing homes’ tollWhat we don’t know about coronavirus origins might kill usEurope faces more slog than snapback in economySubscribe to a daily update on the virus from Bloomberg’s Prognosis team here. Click VRUS on the terminal for news and data on the coronavirus. See this week’s top stories from QuickTake here.Trump Says ‘We Have Prevailed’ (5:30 p.m. NY)President Donald Trump declared at a White House news conference on the coronavirus outbreak that “we have prevailed,” as U.S. deaths from the disease exceeded 80,000 -- a remark he later said pertained only to testing for the infection.“Thanks to the courage of our citizens and our aggressive strategy, hundreds of thousands of lives have been saved,” Trump said. “In every generation, through every challenge and hardship and danger, America has risen to the task, we have met the moment and we have prevailed.”Asked later about his remark that the U.S. had “prevailed,” Trump said he was only talking about testing for the virus. The U.S. didn’t exceed 100,000 coronavirus tests performed until March 19, according to data compiled by the Covid Tracking Project, but more than 300,000 tests were conducted daily on Thursday, Friday and Saturday.White House Orders Staff to Wear Masks (4:40 p.m. NY)The White House ordered everyone entering the West Wing to wear a face mask after Vice President Mike Pence’s press secretary tested positive for the coronavirus last week. The announcement was made in a memo addressed to staff on Monday, according to two people, and said employees didn’t need face coverings while working at their desks.“Staff who sit in the West Wing are not required to wear a facial covering while at their desk if they are appropriately socially distanced from their colleagues,” the memo from the White House Management Office reads.“Unless you absolutely need to conduct in-person business in the West Wing, we respectfully ask you to avoid unnecessary visits,” it added.U.S. to Distribute $11 Billion in Test Funding (4:30 p.m. NY)The Trump administration plans to distribute $11 billion to states for coronavirus testing, according to senior administration officials.The $11 billion is part of the CARES Act stimulus package. It will be distributed under a formula that reflects the burden of Covid-19 as well as population-based estimates, the officials said. The administration plans to release details about the distribution in the next day or two, the officials said.Western States Ask Congress for $1 Trillion in Aid (4:05 p.m. NY)Five Western states have sent a letter to Congress asking for $1 trillion in “direct and flexible relief” for local and state governments trying to recover from the coronavirus outbreak.The letter, which was addressed to congressional leadership including House Speaker Nancy Pelosi and Senate Majority Leader Mitch McConnell, was signed by the governors of the Western States Pact -- a group of states that has banded together to organize their Covid-19 response.California Governor Gavin Newsom announced the letter during his daily press briefing Monday, and it was also signed by the governors of Oregon, Colorado, Nevada and Washington. They are seeking the funding for all 50 states.“This aid would preserve core government services like public health, public safety, public education and help people get back to work,” the letter reads. “Red and blue states alike all are faced with the same Covid-19 math.”U.S. Confirmed Cases Rise 1.3% (4 p.m. NY)U.S. cases rose 1.3% from the day before to 1.34 million, according to data compiled by Johns Hopkins University and Bloomberg News. That was down from Sunday’s growth rate of 1.8% and the lowest daily increase since April 30.New York added 1,660 cases on Sunday, the smallest number since mid-March, and 161 additional deaths, the lowest since late March.Florida reported 40,982 cases, up 1% from a day earlier, according to the state’s health department. Deaths reached 1,735, an increase of 0.8%.California’s cases rose 1.9% to 67,939 while deaths rose 0.9% to 2,770, according to the state’s website.Ontario Cases Fall as Quebec Struggles (3:55 p.m. NY)Ontario reported the lowest number of new cases in six weeks as Canada’s most populous province gradually reopens. Curbside retail, hardware stores and some construction projects have been allowed to restart business. The province expects to announce a plan next week for schools, which have been closed since mid-March, Doug Ford, the province’s premier, said.Meanwhile in Quebec, Premier Francois Legault said the situation in Montreal remains concerning. As schools and shops open in the rest of the province, residents and businesses of Canada’s second-largest city are scheduled to continue under tighter restrictions until May 25.Twitter to Tag Misleading Virus Posts (1:55 p.m. NY)Twitter Inc. will label some misinformation that’s confusing or misleading, increasing the likelihood that more Covid-19 tweets will be marked or taken down. Previously, Twitter reserved that for posts posing a direct threat to safety. The new label will apply to tweets that are “less severe” but “where people may still be confused or misled,” the company said in a blog post.Twitter, like Facebook Inc., has been trying to curb the spread of incorrect data and misleading material, relying on public health authorities to determine what may be misleading.N.Y. to Start Some Reopenings Friday (1:04 p.m. NY)Certain businesses in New York state -- including construction, curbside retail, drive-in movie theaters and some recreational activities -- will reopen this week on a regional basis, Governor Andrew Cuomo said. Each area will have to meet seven criteria, including low rates of virus-related hospitalizations and having certain testing and tracing measures in place. There will be control rooms to monitor each area’s reopening, ensuring they meet the metrics, the governor said in his daily briefing.Cuomo has said that it would be a “miracle” if hard-hit New York City were ready to reopen on May 15. Earlier today, Mayor Bill de Blasio said the city’s lockdown is likely to continue into June.Risk of Transmission Will Rise Again: WHO (1 p.m. NY)As countries ease restrictions and people mix more, the risk of transmission will rise again, said Mike Ryan, head of the World Health Organization’s health emergencies program. The question is whether countries can identify and isolate clusters of cases so the transmission doesn’t reach previous rates, he said.“Shutting your eyes and trying to drive through this blind is about as silly an equation I’ve seen,” Ryan said. “I’m really concerned that certain countries are setting themselves up for some seriously blind driving over the next few months.”Ryan also said the idea that countries with lax measures will “all of a sudden magically reach some herd immunity” is a “really dangerous calculation” as it would involve many deaths.“People are growing tired, we understand, but we need to have people stay with us,” said Maria Van Kerkhove, the WHO’s technical lead on Covid-19.Italy Sees Fewest Cases Since March 4 (12:19 p.m. NY)Italy registered 744 new cases, the lowest number since March 4, on Monday, as Prime Minister Giuseppe Conte struggles to finalize a 55 billion-euro ($59 billion) stimulus package to rescue an economy stricken by the lockdown. Confirmed cases total 219,814. Daily fatalities rose to 179 from 165 on Sunday, with a total of 30,739 reported since the start of the pandemic in late February. The number of patients in intensive care fell to 999, marking the first time in two months it’s fallen below 1,000.Florida Cases Rise 1% as Reopening Expands (12:07 p.m. NY)Florida reported 40,982 Covid-19 cases on Monday, up 1% from a day earlier. Deaths among Florida residents reached 1,735, an increase of 0.8%.Florida allowed salons and barber shops to reopen Monday in most parts of the state, a week after retailers and restaurants were permitted to start back up. Florida’s three most populous counties were initially held back from the first phase of reopening, but one of them -- Palm Beach County -- started up again Monday. Miami-Dade and Broward are expected to follow on May 18.NYC Likely in Lockdown Into June (11:13 a.m. NY)New York City’s lockdown is likely to continue into June, Mayor Bill de Blasio said. While some parts of the state, which has been under lockdown since March, will be able to reopen from Friday, the city hasn’t made enough progress in cutting down on new cases, even as hospital and intensive-care admissions fall.“June is when we’re potentially going to make changes if we make real progress,” the mayor said at his daily briefing Monday. “We have to keep bringing it back to the science and the data.”De Blasio also said health officials will turn to dozens of small private neighborhood medical practices to aid in testing, contact tracing and outpatient care.Clinics throughout the city will be provided with protective gear, including 120,000 surgical masks per week, and 150 will receive training to offer remote care through telemedicine, de Blasio said. The practices will also have access to hotels to isolate patients who live in crowded households, he said.Extra HIV Deaths Foreseen Amid Drug Shortages (9:50 am NY)The World Health Organization and UNAIDS estimated that a six-month disruption of supplies of antiretroviral therapies could lead to 500,000 extra deaths from HIV in sub-Saharan Africa if countries don’t take action. That’s more than the total number of deaths from HIV in the region in 2018. About 25.7 million people live with HIV in that area, where supplies may be disrupted because HIV services are closed or because of shortages. Some antiretrovirals are being used to treat Covid-19.“The Covid-19 pandemic must not be an excuse to divert investment from HIV,” Winnie Byanyima, executive director of UNAIDS, said in a statement.Putin Ends National Stay-at-Home Period (9:35 a.m. NY)Russian President Vladimir Putin ended his national stay-at-home period after six weeks, putting the responsibility for restrictive measures on regional leaders, even as the number of infections surged past most European countries.The number of confirmed cases in Russia rose by 5.6% to 221,344 on Monday, surpassing Italy, France and the U.K. Russia has been recording more than 10,000 new cases a day for more than a week, but the growth has been slowing. Total fatalities rose to 2,009 after 94 more people died.Gilead’s Drug Seen in Short Supply (9:20 a.m. NY)The U.S. will get less than half of Gilead Sciences’ worldwide donation of 1.5 million vials of its Covid-19 medicine over the next six weeks, which isn’t expected to be enough to treat all the patients who would qualify for it.Gilead is donating about 607,000 vials of its remdesivir in the U.S. during that time frame. That’s enough to treat 78,000 hospitalized patients, according to the Department of Health and Human Services. Health officials authorized emergency use of the treatment earlier this month.Wear Face Masks for Long Haul: U.K.’s Johnson (9 a.m. NY)Britons should wear face coverings in enclosed spaces and prepare for a different kind of normal that may last for a year or more, Boris Johnson’s government said as he published a road map for the national recovery from coronavirus.Johnson said social-distancing measures are likely to be needed for the foreseeable future, with people continuing to work from home where they can, until a vaccine or drug treatment can be found. The government aims to allow shops to reopen next month and pubs after July 4.Among the options under consideration is the idea of allowing households to mix, potentially forming “bubbles” with another household. That would allow two households to share childcare, helping parents go back to work, the document said.U.K. jury trials will resume as soon as May 18, Ian Burnett, the Lord Chief Justice of England and Wales, said Monday in a separate statement. The new trials will still have 12 jurors and use social distancing and other measures to ensure safety.Deaths in the U.K. rose by 210 to 32,065, after an increase of 269 the day before.Wuhan Sees First New Cases Since Lockdown (8:18 a.m. NY)Wuhan reported the first new cases since ending its 76-day lockdown on April 8. The six locally transmitted cases, reported on May 9 and 10, were found in people already under quarantine who were asymptomatic before testing positive, according to the local government. Although the new cases are few and appear under control, they serve as a reminder of the risks China faces as it tries to reopen an economy that has seen its worst contraction since 1992.Marriott Demand Slumps, Coty-KKR in Deal (7:35 a.m. NY)Marriott International Inc. saw its business crater in April, with travel virtually shut down around the world. Revenue per available room, a measure of occupancy and pricing, decreased 90% in April, a sign that the company faces a tough road to recovery from the pandemic.Continental Resources Inc., the oil producer founded by billionaire Harold Hamm, is curtailing 70% of its operated output in May. Under Armour plans to reduce its planned operating expenses by about $325 million by reducing bonus compensation for some employees, temporary layoffs and limiting additional spending. However, AutoNation, the biggest car dealership chain in the U.S., said car sales have already started to pick up in the end of April as shutdown orders eased.Coty Inc. shares surged after the cosmetics company agreed to sell beauty and hair-care brands including Wella to KKR & Co. in a deal that will also include an investment in the cosmetics company by the buyout firm. Sales in the quarter slumped 23%.Commerzbank AG abandoned its planned sale of Polish subsidiary mBank SA, saying the coronavirus outbreak has made it impossible to attract a worthwhile offer.India May Allow Some Domestic Flights (6:58 a.m. NY)India is considering allowing some domestic flights to resume on May 18 or earlier as the government looks to reopen a key part of the economy and provide relief to airlines, which haven’t been able to fly since March because of a nationwide lockdown, according to people familiar with the matter.The Ministry of Civil Aviation is in talks with airlines, travel agents and the federal home ministry about the move, the people said, asking not to be identified because the deliberations aren’t public. A decision may come Monday, they said, adding that Prime Minister Narendra Modi is meeting with state chief ministers this afternoon.Macy’s Attracts Billionaire Investors (6:54 a.m. NY)Macy’s Inc., one of the U.S. retailers struggling as the pandemic crimps demand, attracted Czech billionaire Daniel Kretinsky, whose investment vehicle bought a stake to engage in “constructive discussions” with management. Macy’s is seeking additional sources of financing to meet its obligations as many of its brick-and-mortar stores remain closed.Vesa Equity, the investment vehicle for Kretinsky and partner Patrik Tkac, amassed a 5% stake in Macy’s, according to a securities filing. The purchase makes it one of the company’s top five shareholders, according to Bloomberg data.Deutsche Bank Offers Bond to Bolster Capital (6:24 a.m. NY)Deutsche Bank AG is offering a subordinated bond to boost its capital ratio as the bank girds itself for the deepest recession in almost a century. The bond, known as Tier 2, “will increase Deutsche Bank’s total capital ratio” and “improve its buffer versus regulatory capital requirements,” the lender said.Chief Executive Officer Christian Sewing recently said that increased lending and higher credit provisions due to the coronavirus will cause the bank’s capital buffers to temporarily fall below the minimum threshold he set. Germany’s largest lender was already dipping into its capital reserve before the crisis to pay for the deep restructuring that the CEO revealed last summer.New Virus Cases in Indonesia Rise (6:13 a.m. NY)The death toll from the coronavirus outbreak in Indonesia neared 1,000 as more cases were confirmed across the archipelago, with President Joko Widodo expressing disappointment over the slow progress in expanding testing for the disease. Eighteen people succumbed to the virus in the past 24 hours, taking the total to 991. The total number of positive cases rose by 233 to 14,265.With the pandemic showing no signs of slowing, Jokowi, as Widodo is known, called for scaling up the nation’s diagnostic capacity, saying the daily testing of 4,000-5,000 specimens was “far below our target.”(A previous version corrected the average weekly increase in U.S. cases.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
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Deutsche Bank Sells Bond to Boost Capital as Recession Looms
(Bloomberg) -- Deutsche Bank AG is offering a subordinated bond to boost its capital ratio as the bank girds itself for the deepest recession in almost a century.The euro-denominated bond, known as Tier 2, “will increase Deutsche Bank’s total capital ratio” and “improve its buffer versus regulatory capital requirements,” the lender said in a statement on Monday.Chief Executive Officer Christian Sewing recently said that increased lending and higher credit provisions due to the coronavirus will cause the bank’s capital buffers to temporarily fall below the minimum threshold he set. Germany’s largest lender was already dipping into its capital reserve before the crisis to pay for the deep restructuring that the CEO revealed last summer.European and national regulators have granted banks more flexibility in how they can meet certain capital requirements to help keep lending flowing to businesses struggling amid the crisis.“We’re issuing now because the market environment is supportive,” said Dixit Joshi, Deutsche Bank’s group treasurer. “The issue will also help to support business growth and our clients.”The lender will sell 1.25 billion euros ($1.4 billion) of Tier 2 notes at 600 basis points above benchmark midswap rates, according to a person with knowledge of the sale, who asked not to be identified as they’re not authorized to speak about it.Deutsche Bank also launched a tender for 2 billion euros in outstanding bonds to “provide liquidity” to investors, Joshi said. If successful, the deal may also boost quarterly earnings as the current valuation likely means Deutsche Bank could buy the securities below the price the lender has used to account for them on its balance sheet, potentially providing an accounting benefit.The new bond won’t affect the bank’s common equity tier 1 ratio, a key measure of financial strength. However it will widen the gap between its total capital ratio and a regulatory requirement known as maximum distributable amount, which determines whether coupons on Additional Tier 1 notes can be paid. The requirement is 15.04% and the bank had a 16.59% ratio at the end of the first quarter.Bond issuance conditions have improved significantly since the coronavirus crisis shuttered primary markets in February. The average spread on euro Tier 2 bonds is more than 100 basis points tighter than it was in late March, according to a Bloomberg Barclays index. Royal Bank of Scotland Group Plc last week became the first European lender to sell Tier 2 debt for nearly three months.Deutsche Bank’s bond makes use of a recent regulatory change that now allows banks to use more subordinated debt to meet regulatory requirements, helping them to cut costs. The change makes it likely that other banks will sell more subordinated bonds, whether Tier 2 or riskier Additional Tier 1s, said Tom Kinmonth, a fixed income strategist at ABN Amro.Banks who aren’t “in a super-comfortable situation” with their capital buffers are particularly likely to use the new flexibility provided by the regulator, said Andreas Meyer, who helps manage more than 3 billion euros including bank bonds at Aramea Asset Management in Hamburg.(Updates with bond details in sixth paragraph, tender in seventh paragraph and more details on market conditions in tenth and eleventh paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
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I've Seen Trump's Tax Returns and You Should, Too
(Bloomberg Opinion) -- President Donald Trump took to Twitter early Sunday morning, elated: “So great to see our Country starting to open up again!”He shared that sentiment with nearly 80 million followers and attached it to a tweet from one of his golf clubs, Trump National, in Rancho Palos Verdes, California. “Game on! We are thrilled to announce the reopening of @trumpgolfla beginning Saturday May 9th!,” the club tweeted. “We look forward to welcoming you back. Book your tee time now!”Sometimes a tweet is just a tweet. And sometimes it’s an advertisement for your business. And sometimes, when the president of the United States promotes his business on Twitter while overseeing the federal response to a pandemic gutting the economy, it’s a financial conflict of interest.Is Trump pushing businesses to reopen despite ongoing perils attached to the coronavirus because it’s best for the country? Or is it because Covid-19 has battered his family’s fortunes? Or is it simply because he has the upcoming presidential election in mind? Who knows. But we are more than three years into this presidency and the same questions that have hung over Trump from the moment he launched his bid for the White House still linger: What are the contours of his personal finances and how do they inform his actions and policies?On Tuesday, the Supreme Court will help shape our understanding of some of this when it hears arguments involving efforts by Congress and a New York prosecutor to get access to Trump’s tax returns, bank documents and bookkeeping records. Trump’s lawyers and the Justice Department contend that the president shouldn’t have to comply with subpoenas — or can block his financial advisers from complying — because the requests are overly intrusive or undermine the sweeping immunity from criminal investigations he should enjoy while in office.Congress says it wants Trump’s tax returns so it can craft legislation modernizing federal ethics and disclosure laws and protecting the 2020 election from foreign interference. Manhattan District Attorney Cyrus Vance Jr. is conducting a probe into the Trump Organization’s efforts to mask hush money paid to two women who said they had sexual encounters with Trump. He wants to explore whether Trump’s team falsified business records as part of those maneuvers.While the Supreme Court’s decision will likely touch on crucial Constitutional matters such as the separation of powers and the legislative branch’s ability to monitor the executive branch, the animating force guiding the court in this matter may be even more basic: whether or not any president is above the rule of law. If the court’s decision pivots off of that, then you’d do well to read George Conway’s recent op-ed in the Washington Post. “The Constitution is concerned with protecting the presidency, not the person who happens to be the president,” Conway writes. “That’s because no one in this country is above the law.”The Constitution also makes it clear that presidents can’t use the most powerful office in the land to line their wallets. Articles I and II forbid presidents from accepting what the 18th century called “emoluments” and what the 21st century calls “bribes” from foreign or domestic sources. The Constitution’s ban on emoluments in and of itself requires presidents to be transparent about their finances and circumspect about their business dealings.While federal conflict-of-interest laws dating from the Civil War era and updated in 1978 in the wake of the Watergate scandal also require presidents to disclose assets and business interests – and to have potential conflicts monitored by a federal ethics watchdog — much of the disclosure remains voluntary. Presidents remain exempt from federal conflict-of-interest statutes, so practices like placing assets in a blind trust (which Lyndon B. Johnson, Jimmy Carter, Ronald Reagan, both of the Bushes and Bill Clinton did) or releasing personal income tax returns (which every president since Carter has done) is essentially voluntary. Financial transparency in the White House is a tradition but not a requirement.Trump chose to buck tradition, of course. He hasn’t released his tax returns and the trust controlling his business interests is anything but blind — it’s overseen by his two eldest sons and his longtime accountant. Litigants typically aren’t hesitant to release information or documents that reflect well on themselves, so the natural question arising from Trump’s stonewalling in the matters the Supreme Court will hear is, “What’s he hiding?”Trump sued me for libel in 2006 for a biography I wrote, “TrumpNation,” claiming the book unfairly and intentionally misrepresented his track record as a businessman and lowballed the size of his fortune. The suit was dismissed in 2011.During the course of the litigation, Trump resisted releasing his tax returns and other financial records. My lawyers got the returns, and while I can’t disclose specifics, I imagine that Trump is hesitant to release them now because they would reveal how robust his businesses actually are and shine a light on some of his foreign sources of income.Deutsche Bank AG, one of the firms Trump’s lawyers are trying to stifle in their arguments before the Supreme Court, also turned over documents in my case — including its own assessment of Trump’s wealth that pegged his fortune at $788 million in 2004, well below the $3 billion he told them he had at the time. Deutsche is the only major global bank to have continued doing business with Trump since the early 1990s and is conversant with his financial comings and goings since then.Mazars USA is Trump’s outside accounting firm. Trump’s lawyers will argue before the Supreme Court that it too shouldn’t comply with subpoena requests for documents. Mazars, which boasts a history ProPublica recently described as “colorful,” turned over documents in my litigation with Trump as well (through a predecessor company with which Mazars later merged). That trove included a financial statement Trump routinely used to substantiate his claims to fabulous wealth. The document, it turned out, was drafted without regard for standard accounting practices or other factors that might have diminished the future president’s claims.If all of this information from Trump’s taxes, bankers and accountants was good enough for me over a decade ago, it’s certainly good enough for Congress and the Manhattan district attorney today. It’s also good enough for the American people. If we’ve learned one thing from the Trump presidency it’s that it’s no longer enough to rely on tradition when it comes to the Oval Office and financial transparency. Financial transparency should be a requirement for all presidents going forward — and the Supreme Court would do well to help pave the way.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Timothy L. O'Brien is a senior columnist for Bloomberg Opinion.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
