|Bid||6.23 x 200000|
|Ask||6.24 x 110000|
|Day's range||6.19 - 6.43|
|52-week range||5.50 - 9.66|
|Beta (3Y monthly)||1.93|
|PE ratio (TTM)||10.81|
|Earnings date||7 Aug 2019|
|Forward dividend & yield||N/A (N/A)|
|1y target est||11.78|
(Bloomberg Opinion) -- The radical restructuring of Deutsche Bank AG unveiled at the start of July will be a monumental task for the lender’s senior managers. The job of the European Central Bank’s finance industry supervisors, who have to make sure the revamp goes smoothly, won’t be easy either.Deustche’s plan is a last-ditch attempt to make sure the troubled bank avoids more serious problems in the future. The ECB will need to use its regulatory stick and carrot wisely. This means standing by the lender in its sensible efforts to downsize, but being ready to demand more capital if the attempt doesn’t go according to schedule.Andrea Enria, head of the Single Supervisory Mechanism (the ECB’s banking supervisory body), dodged a bullet in April when Deutsche and its domestic rival Commerzbank AG decided not to merge. The combination would have created a mega-lender that was too big to fail and one that had little credible prospect of shrinking any time soon. The collapse of the talks left Deutsche’s executives with little alternative but to scale down on their own, which was always the best route.So far the supervisors have been supportive of the bank’s restructuring. Deutsche will target a core capital ratio (CET1) of 12.5%, which is above its minimum level of 11.8% but below the 13.7% in the fist-quarter and a previous full-year target of higher than 13%. This concession means the lender won’t have to raise extra capital on the market, a boon for its shareholders. The message from the ECB seems to be that so long as the bank is willing to address its problems and become less risky, the supervisors will support it.Such leniency makes sense but it cannot last forever. Deutsche’s strategy involves several uncertain steps, including the creation of a “bad bank” to hold 74 billion euros ($83.2 billion) of risk-weighted assets. This move accompanies the courageous decision to shut down Deutsche’s equity trading and sales business, which became a liability as the lender tried unsuccessfully to compete with Wall Street’s giants. Some of these assets will have to be sold and the central question for supervisors is what price Germany’s largest bank will be able to command. Should it be too low, this might create a capital hole.This issue is acute because Deutsche will start from a position of weakness in any sale negotiations. Some of the assets are illiquid and there may not be many buyers queuing up for them. Deutsche’s bargaining power will be weakened further because potential purchasers know it’s under pressure to sell.The unwinding of Deutsche’s equity business could bring to the fore a controversy that has long tormented the SSM. Some – notably the Bank of Italy – have argued that the illiquid assets sitting on the balance sheets of large lenders like Deutsche are a far bigger problem than the ECB has dared acknowledge. The central bank has always insisted supervision has been adequate and that there’s been no special treatment for certain countries or lenders.Supervisors certainly can’t afford for this restructuring to go wrong. In 2016 the International Monetary Fund singled out Deutsche as “the most important net contributor to systemic risks” to the global financial system. For now the German lender appears to have enough capital and plenty of liquidity, although its profitability has been poor. In the absence of a convincing turnaround, the ECB may face uglier questions in the future, including whether Berlin should be allowed to rescue the bank. While the EU has vowed to ensure that any bank can be wound down safely, this is untested in the case of mega-banks such as Deutsche.Enria’s legacy at the helm of the SSM will hinge on how well he oversees Deutsche’s reset. For the sake of the EU’s financial stability, one hopes he gets it right.To contact the author of this story: Ferdinando Giugliano at email@example.comTo contact the editor responsible for this story: James Boxell at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Ferdinando Giugliano writes columns on European economics for Bloomberg Opinion. He is also an economics columnist for La Repubblica and was a member of the editorial board of the Financial Times.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
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(Bloomberg) -- Treasury two-year yields may slide to 1% by the end of 2020 as the Federal Reserve makes a succession of interest-rate cuts to support growth, Citigroup Inc. says. The dollar is set to slide in that scenario, according to Pacific Investment Management Co.“We’re at a point where we’re weighing whether the Fed will cut for insurance or if they’re entering a period of structural, cyclical downturn in interest rates -- I’m leaning more towards the latter,” said Shyam Devani, senior technical strategist at Citigroup in Singapore. “I wouldn’t be surprised if we see two-year yields dropping to 1% by the end of next year.”Citi is forecasting the Fed will lower its benchmark rate by 25 basis points this month and potentially cut another two times by year-end. “Inflation expectations remain low, we have a global slowdown in growth and commodity prices remain weak,” he said. “The Fed could cut well into next year.” Traders are pricing in close to three quarters of a percentage point of easing by year-end after Chairman Jerome Powell’s dovish testimony to Congress on Wednesday, when he cited slowing global expansion and trade tensions as threats to the U.S. economy. The Treasury two-year yield was one basis point lower on the at 1.82% in New York morning trading after sliding eight basis points on Wednesday.Pimco’s ViewWhether the dollar is poised for a prolonged decline depends on how the central bank positions its July move -- especially if it’s the beginning of a cycle, said Erin Browne, a managing director and portfolio manager at Pimco in Newport Beach, California.“What really matters is, is this an insurance cut or a sustained move lower?” she said in a Bloomberg Television interview on Wednesday. “If it’s a sustained move lower, I think the curve steepens fairly significantly from here and we could start to see the dollar really roll over.”The dollar would be particularly vulnerable against the euro and potentially the yen should the Fed embark on a series of rate cuts, Browne said. The Bloomberg Dollar Spot Index fell 0.3% on Thursday, extending its decline to 1.7% from this year’s high set in May.Powell’s remarks not only failed to push back against the rate cut that’s fully priced in for July, they boosted the rate-cut narrative, Andrew Hollenhorst, chief U.S. economist at Citigroup in New York, wrote in a research note.A 50 basis-point cut in July is a real possibility, though a 25 basis-point move is likely to be the compromise policy outcome, he said.Here’s what other market participants are saying:Dollar Catalyst (BNP Paribas)Powell’s testimony “is a good potential catalyst for a resumption of the USD weakness we saw last month,” analysts including Shahid Ladha saidFlatter Curve (DBS Bank)Treasury yield curve may flatten ahead of Fed’s July meeting as markets are already more than fully priced for an “insurance” rate cut. “I’m biased toward some flattening” in the 2-10 year part of the U.S. yield curve, said Eugene Leow, rates strategist in SingaporeGreenback Winner (State Street)The dollar could climb even after the Fed cuts as investors may start to cover underweight positions. “All the roads point to one result: that the dollar could possibly be the sole winner,” said Bart Wakabayashi, branch manager in TokyoAvoiding Panic (Commerzbank)“A 50bps cut would smack a bit too much of panic,” said Bernd Weidensteiner, economist in Frankfurt. “After the release of a rather strong employment report on Friday, a large step is unlikely”Dollar Gain (RBC Capital Markets)“The dollar would remain as G-10’s highest yielder and that should lend support to dollar in a low vol/carry-obsessed world,” said Daria Parkhomenko, FX strategist in New York(Updates prices, chart.)\--With assistance from Chikafumi Hodo, Masaki Kondo and Katherine Greifeld.To contact the reporters on this story: Ruth Carson in Singapore at email@example.com;Chester Yung in Singapore at firstname.lastname@example.orgTo contact the editors responsible for this story: Tan Hwee Ann at email@example.com, Nicholas ReynoldsFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Commerzbank is hiring ING's Roland Boekhout as its new head of corporate clients, replacing Michael Reuther from January, the two banks said on Thursday. Boekhout, who has been with the Dutch bank since 1991 and led ING's Germany business from 2010-2017, has been a board member at ING since 2017.
(Bloomberg Opinion) -- One of Europe’s largest financial institutions, Deutsche Bank AG, finally appears poised to do what the entire region’s banking sector needs to do: get rid of bad assets and increase its capacity to absorb losses.If the plan works, it will be a step in the right direction. That said, European authorities had better be ready to act if it doesn’t.CEO Christian Sewing has announced the bank’s most ambitious reorganization to date — eliminating some 18,000 jobs, and largely abandoning the German giant’s efforts to compete with U.S. investment banks, particularly in equities trading. The new Deutsche Bank, if all goes well, will be much more focused on the expanding business of serving corporate clients.There is no question that this decision comes with great personal pain. A lot of lives were upended this week. Still, this course is far more promising than the one Sewing was previously considering: merging Deutsche with crosstown competitor Commerzbank AG. That would have created a bigger entity with potentially bigger problems.The new plan improves systemic safety in two ways. First, it will leave Deutsche Bank’s balance sheet more than 200 billion euros smaller — a good thing, bearing in mind that Europe is still overbanked and needs to redistribute its banking capacity to better reflect demand. Second, the plan will help Deutsche handle future shocks. By 2022, the bank aims to have about 5 euros in loss-absorbing capital for each 100 euros in assets — a leverage ratio of 5%, up from 3.9% at the end of March. This will make a hitherto undercapitalized bank less of a weak link in the European financial system.Granted, this new leverage ratio doesn’t account for the riskiness of Deutsche’s business, which (according to regulatory standards) will increase. Also, a ratio of 5% — assuming the bank can achieve it — would still fall far short of what would be needed to weather a severe crisis.This is where European authorities come in. They’ve been slow to compel banks to develop realistic crisis plans, and to pre-commit the financial resources needed to wind down large institutions with minimal collateral damage. And Europe’s governments, eager to build and sustain national champions, have often indulged the kind of overreach that blighted Deutsche’s prospects. In the future, regulators need to be less forgiving and more impatient, so that Europe’s financial system is better prepared for the next crash.—Editors: Mark Whitehouse, Clive Crook.To contact the senior editor responsible for Bloomberg Opinion’s editorials: David Shipley at firstname.lastname@example.org, .Editorials are written by the Bloomberg Opinion editorial board.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
(Bloomberg) -- Financial firms including Goldman Sachs Group Inc. and Morgan Stanley are predicting that the European Central Bank’s flagship crisis-fighting tool will soon make a comeback.Policy makers could relaunch bond purchases as soon as September -- barely nine months after they capped the program at 2.6 trillion euros ($3 trillion), according to Evercore ISI’s Krishna Guha. Other institutions calling for the ECB to restart purchases by early next year include ABN Amro Bank NV, Danske Bank A/S, and BNP Paribas SA.ECB President Mario Draghi said last month that officials will need to add monetary stimulus if the economic outlook doesn’t improve. The euro-zone economy has been stuck in a slump for more than a year, prompting some officials to say it’s no longer possible to consider the downturn a temporary blip.While most investors and economists have penciled in a rate cut by September, their views on QE are more mixed. ECB Executive Board member Benoit Coeure, the head of market operations and a driving force behind QE when it was launched in 2015, said in remarks broadcast Monday that policy makers could “hypothetically” restart net asset purchases if circumstances make it necessary.The latest boost to the likelihood of bond purchases, according to Guha, was last week’s nomination of International Monetary Fund chief Christine Lagarde to lead the ECB when Draghi steps down at the end of October. She has previously praised bond purchases as a policy tool.That “certainly removes doubts in the eyes of the market as to whether the outgoing ECB president could muster support for one last big push before leaving office,” Guha said.Here is a round-up of views on how the ECB might draw on QE to stimulate the euro-area economy:Goldman Sachs“A return to large-scale QE is complicated by the ECB’s self-imposed limits on its asset purchases. But significant headroom remains to expand corporate sector purchases and we estimate that the ECB could buy up to 400 billion euros in sovereign debt under the current constraints”“A limited QE program -- for example, with monthly purchases of 30 billion euros for nine months -- seems feasible within the existing constraints”Morgan Stanley“Sub-par growth and below-target inflation lead us to believe that the ECB now thinks that extra stimulus is warranted. This likely means reactivating its asset purchase program. When exactly and in what size is uncertain. While it could turn out to be different, our assumption is that the central bank could start buying something like 45 billion euros a month as early as the fourth quarter, with an announcement in September”JPMorgan“At this stage, we do not expect more QE, but we emphasize that the visibility is extremely low in terms of the macro outlook and the ECB’s response to it”ABN Amro“We expect the ECB to relaunch QE given the deterioration of the economic outlook and sliding inflation expectations. The second QE program could total 630 billion euros and run for nine months at 70 billion euros a month from January 2020 onward”“The new program could see relatively more purchases of national agency and regional bonds and corporate bonds. Within the public sector program, the issue(r) limit for sovereigns could be left unchanged, though it could rise for national agency and regional bonds”BNP Paribas“We think the ECB will announce a 35-40 billion euros monthly pace of purchases in December for six to nine months, leaving the door open to a further extension, with risks of an earlier announcement”“The new QE program will concentrate on government bonds, in our view, complemented by purchases of private sector assets”HSBC“The current growth and inflation outlook, alongside European Union politics, mean we don’t see an imminent restart of QE, although a shift in tone on technical constraints means a credible program is possible if downside risks crystallize”Commerzbank“From the ECB’s standpoint, there are a number of reasons why net asset purchases should not be resumed. Even if the central bank were to raise the issuer limit from the current 33% to 50%, our calculations suggest that this higher limit would probably be achieved in roughly two years”“The ECB therefore has to use its ammunition very carefully, even though it officially stresses that this is not a problem”Danske Bank“We now expect ECB to cut rates by 20 basis points, introduce a tiering system, extended forward guidance, and restart QE in a package which could come already in September”"Our baseline is that ECB will restart QE for the 12 months at a monthly pace of 45-60 billion euros a month"To contact the reporters on this story: Carolynn Look in Frankfurt at email@example.com;Kristie Pladson in Frankfurt at firstname.lastname@example.orgTo contact the editor responsible for this story: Paul Gordon at email@example.comFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
FRANKFURT/SYDNEY/HONG KONG/NEW YORK, July 8 (Reuters) - D eutsche Bank laid off staff from Sydney to New York on Monday as it began to slash 18,000 jobs in a 7.4 billion euro ($8.3 billion) "reinvention" that will lead to yet another annual loss, a plan that knocked its already battered shares. Germany's largest lender said on Sunday it will scrap its global equities unit and cut some fixed-income operations in a retreat from a long-held ambition to make its struggling investment bank, with 38,000 staff, a force on Wall Street. Deutsche Bank has almost 91,500 staff around the world.
(Bloomberg Opinion) -- It makes sense for investment banks to cut businesses where they’re too small to be competitive and staying in is costly. So Deutsche Bank AG’s exit from equities trading is overdue. That doesn’t mean life is going to get any easier, in Asia at least.The German lender is counting on its strength in fixed-income and currencies trading to pivot into becoming primarily a corporate bank that serves multinationals’ needs for transactions and cash management. That will put it head to head with the dominant players in Asia: HSBC Holdings Plc, Citigroup Inc. and Standard Chartered Plc. They won’t be an easy nut to crack.At least this approach has a better chance of succeeding than building up Deutsche Bank’s private-banking business, where leaders UBS Group AG and Credit Suisse AG are trying to beat back the challenge of Chinese and Singaporean firms. No bank has exited the equities business on this scale before, as my colleague Elisa Martinuzzi has noted, and it’s unclear what effect this may have on private-banking customers.Deutsche Bank’s stronghold in fixed income and currencies will count for something.(1)It was the region's fourth biggest fixed-income bank by revenue last year, according to Coalition Development Ltd., a London-based analytics company. Within that business, the German lender ranked first in credit, which includes trading corporate bonds and structured products, while it was second in foreign exchange. That’s a crucial calling card for any firm that wants to make it as a corporate bank in Asia.Contrast that with equities trading, where Deutsche Bank ranked 11th by revenue last year, down from sixth in 2015, according to Coalition. In cash equities (which comprises research, sales and trading), it was 10th. Equities increasingly is a business requiring scale, and high salaries for bankers and traders have become harder to support at a time of shrinking commissions and rising automation. Stiffer competition from Indian and Chinese banks has compounded the difficulties.Job cuts in Asia will fall disproportionately on the Hong Kong operation, which is focused on equities, while Singapore should be more resilient, as the bank’s primary fixed-income hub. The question is whether Deutsche Bank’s edge in bonds and foreign exchange will be enough to attract local corporate customers or U.S. multinationals away from the likes of HSBC and Citigroup.Deutsche Bank will also need to keep European corporate clients loyal and manage the high technology costs that come with a push into transaction banking. Luckily, transaction banking and cash management is a humdrum business that tends to have sticky clients in the shape of industrial corporations, unlike institutional investors and hedge funds, which are quick to switch banks. The reason the German government was keen on the since-abandoned merger between Deutsche Bank and Commerzbank AG was that it didn’t want local companies to be left without a national bank overseas at a time when Wall Street firms already dominate European banking.A bigger challenge may be maintaining its heft in fixed income. Morale is far from high, and star traders can be expected to defect as they worry that this restructuring – the bank’s third in four years – won’t be the last. Deutsche Bank plans to cut its 91,000-person workforce by a fifth. At the end of 2018, Asia accounted for 19,700 out of 92,000 global employees, of which more than 10,000 were support staff. The pressure isn’t going away. (1) Deutsche Bank largely exited commodities in 2013, prompted by the high capital requirements of the business and low margins.To contact the author of this story: Nisha Gopalan at firstname.lastname@example.orgTo contact the editor responsible for this story: Matthew Brooker at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Nisha Gopalan is a Bloomberg Opinion columnist covering deals and banking. She previously worked for the Wall Street Journal and Dow Jones as an editor and a reporter.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
(Bloomberg Opinion) -- Deutsche Bank AG has given up waiting. After years spent adrift hoping that its ambitions to compete with Wall Street would come good again, Germany’s biggest bank has sounded the retreat.Chief Executive Officer Christian Sewing’s overhaul may not be particularly imaginative – but it is what the lender needs if it is to do more than just survive. After five restructurings in four years, the depth of his cuts mark the latest plan out as a real attempt to change course. He deserves a fair hearing.If they can stand the painful initial costs of the restructuring and all goes well, investors should eventually be rewarded with buybacks and dividends. But the destruction of shareholder value to date has been so grave, they are unlikely to give this reboot a second chance. Sewing needs to provide details about how he will cut costs and deliver the most elusive thing of all: Revenue growth.On Sunday, Deutsche Bank announced it will shrink its trading activities by 40% through an unprecedented withdrawal from equities – a loss-making business in a market where it lags peers. In fixed-income, the rates operation will also be scaled back. About 18,000 jobs, almost 20% of the workforce, will go. Sewing is jettisoning what Deutsche Bank was never very good at and pivoting away from hedge-fund clients to focus on corporate customers. In time, earnings should be less volatile and more evenly spread between the commercial lending, trading, asset management and private banking operations.The revamp is starting with some of the most senior executives. Three board members will leave and, symbolically, some of the investment bank’s old guard are also departing, including Garth Ritchie, who led the unit.Deutsche Bank has to convey both internally and externally that, this time, change means change. Accepting this hasn’t been easy. It involves the humility of giving up on a two-decade effort to be the Goldman Sachs Group Inc. of Europe – a course that was marked by its acquisition of Bankers Trust Corp. in 1999.Since the financial crisis, though, Deutsche Bank has been hobbled by higher regulatory costs, record-low interest rates, and more than $18 billion of fines. Complex transactions soaked up more expensive capital, while the business of trading bonds – the firm’s engine during the boom – shriveled. The result: ever dwindling revenue and profitability.Crucial to the success of Sewing’s plan will be his ambitious attempt to shrink the firm’s balance sheet. Non-core assets will be moved to a bad bank. About 288 billion euros ($323 billion) of the so-called leverage exposure associated with these assets should be wound down in three years. That should help to improve the leverage ratio to 5%, from 3.9% at the end of March, and enable the firm to return capital to shareholders.Some of those assets will be assumed by France’s BNP Paribas SA, which is taking over some of Deutsche Bank’s equities operations – but the rest will be run off or sold. That will leave the German bank vulnerable it if fails to get the prices it hopes for them. More details – which weren’t immediately available – will be essential to understanding how easy this will be to pull off.Sewing is also attacking Deutsche Bank’s stubbornly high cost base. Adjusted costs (which exclude, among other things, litigation and restructuring charges) are slated to drop by a quarter by 2022. Again, how he plans to achieve this remains sketchy.One thing that may cheer investors is something that was entirely missing from the plan: a request for more money. Deutsche Bank has tapped shareholders for 30 billion euros over the past decade. That said, they will have to forfeit dividends this year and next to help fund the 7.4 billion-euro revamp.So what took Sewing so long? It’s clear the aborted merger with cross-town rival Commerzbank AG earlier this year was an unhelpful distraction. Key, too, though has been gaining approval from regulators to lower the capital ratio to help fund the reorganization, shielding shareholders from a bigger hit.But he really couldn’t have waited longer. The outlook for revenue is deteriorating and some clients appear to be getting jittery. On Friday, Bloomberg News reported that hedge fund Renaissance Technologies had been withdrawing money in recent months.Sewing’s plan is ambitious and faces big pitfalls. No bank has exited the equities business on this scale before, and it’s unclear what effect it may have on, for example, private banking customers. Equally, the retreat in rates may hurt the remaining transaction banking operation: Clients may choose to take more of their business away. Investors will want to get a better understanding for how he intends to grow revenue at the remaining businesses by about 2% a year through 2022.If it all works, the firm should have 5 billion euros of capital to return to investors from 2022. That should underpin a stock price that values the bank at just a quarter of the book value of its assets. And once Deutsche Bank makes some strides in treating its gangrene, its competitors might also be more tempted to team up.To contact the author of this story: Elisa Martinuzzi at firstname.lastname@example.orgTo contact the editor responsible for this story: Edward Evans at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Elisa Martinuzzi is a Bloomberg Opinion columnist covering finance. She is a former managing editor for European finance at Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Deutsche Bank is to axe vast swathes of its trading desks in one of the biggest overhauls to an investment bank since the aftermath of the financial crisis, in a restructuring that will see 18,000 jobs go and cost 7.4 billion euros. The plan represents a major retreat from investment banking by Deutsche Bank, which for years had tried to compete as a major force on Wall Street. As part of the overhaul, the bank will scrap its global equities business, scale back its investment bank and also cut some of its fixed income operations, an area traditionally regarded as one of its strengths.
The head of Deutsche Bank's investment bank agreed to step down on Friday in a sign of the division's waning influence as Germany's largest lender prepares a multi-billion dollar restructuring aimed at reversing a decline in its fortunes. Chief Executive Christian Sewing will represent the investment bank on Deutsche Bank's board following the departure of the division's boss Garth Ritchie, who has been a deputy CEO with a board seat, the Frankfurt-based bank said in a statement. Ritchie, whose contract was extended last September for another four years, was Deutsche's best paid board member in 2018, with earnings of 8.6 million euros.
(Bloomberg) -- Terms of Trade is a daily newsletter that untangles a world embroiled in trade wars. Sign up here. German factory orders slumped in May in the latest sign that global trade uncertainty is turning Europe’s temporary slowdown into a more serious downturn.The economy ministry reported huge declines in export orders and investment goods, just days after a survey showed factory activity shrank for a sixth month in June. The continued gloom is increasing concern at the European Central Bank, and a growing number of economists are predicting it will add more monetary stimulus as soon as this month.While orders data can be volatile, there’s little doubt the numbers are disappointing. The 2.2% overall drop on the month was far worse than the 0.2% fall predicted by economists in a Bloomberg survey. The year-on-year decline of 8.6% was the biggest in almost a decade.ING said the report “wraps up a week to forget,” and JPMorgan now predicts that Germany may have contracted in the second quarter. If that happens, it would be the third time in a year that Europe’s largest economy posted no growth at all.Germany’s troubles, some of which are linked to the car industry, have weighed on the euro region. Governing Council member Olli Rehn summed up the mood on Thursday, saying saying that growth has “slowed significantly” and it’s no longer possible to consider the downturn as temporary.On Friday, Commerzbank changed its forecast on ECB stimulus, predicting a 20 basis-point cut in the deposit rate this month, larger than previously anticipated.What Bloomberg’s Economists Say...“The further deterioration in demand for Germany’s exports means the improvement in conditions ECB President Mario Draghi wants to see won’t be forthcoming -- that’s consistent with our forecast for a rate cut in September. But if the weakness spreads to services or the euro-area’s labor market begins to stutter, we think this could prompt more drastic action, including the relaunch of quantitative easing.”\--Jamie Murray, chief European economistClick here for the full INSIGHTThe outlook for the economy -- and anticipation of another round of monetary policy easing -- has pushed bond yields lower. Germany’s 10-year this week fell below the ECB’s minus 0.4% deposit rate for the first time, while both Spain and France are also enjoying record-low borrowing costs.“The eagerly expected economic recovery in Germany is still nowhere to be seen,” said Commerzbank’s Peter Dixon and Joerg Kraemer. “In addition to the weakness of the auto sector, this is attributable to weak demand from China, where the extensive stimulus measures have not yet had any effect.”\--With assistance from Kristian Siedenburg.To contact the reporter on this story: Carolynn Look in Frankfurt at firstname.lastname@example.orgTo contact the editors responsible for this story: Paul Gordon at email@example.com, Fergal O'BrienFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
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German prosecutors are escalating a money laundering inquiry involving Deutsche Bank , including planned raids on wealthy former clients, a person with direct knowledge of the matter told Reuters. Frankfurt's state prosecutors will in the coming months search the homes of people who it suspects of using a company formerly owned by Germany's biggest bank for tax evasion and money laundering, the person said. The intensified scrutiny of Deutsche Bank, which has said it has no indication of any misconduct, comes at a delicate time as the Frankfurt-based bank seeks to revamp its struggling business and repair a reputation ravaged by a series of scandals.
(Bloomberg) -- Gold tumbled back below $1,400 an ounce after the U.S. and China reached a truce in their trade war, dealing a blow to havens.Prices fell the most in a year after Presidents Donald Trump and Xi Jinping agreed to resume negotiations in a bid to resolve differences between the world’s two biggest economies. Still, the setback may be temporary as investors now train their focus on U.S. jobs data due Friday for clues on the Federal Reserve’s next move on policy.“Gold was well overdue a period of consolidation and gold bulls should welcome it,” said Ross Norman, chief executive officer of gold brokerage Sharps Pixley Ltd. “This provides a welcome entry point.”Bullion hit a six-year high last week as top central banks including the U.S. Federal Reserve adopted a more dovish tone and tensions spiked between the U.S. and Iran. Driven by speculation that U.S. interest rates may soon be headed lower, investors plowed into bullion-backed exchange-traded funds, which swelled 5% in June, the most since 2016.Gold futures dropped 1.7% on the Comex in New York, the biggest decline in over a year, to settle at $1,389.30 at 1:32 p.m. Prices rallied 7.8% last month. A gauge of the U.S. dollar rose 0.5% on Monday after sagging 1.6% in June.Gold’s pull-back was a natural reaction to the dollar-friendly news, said David Govett, head of precious metals trading at Marex Spectron Group in London. “I don’t think we collapse from here, but I do think we have seen the highs now.”After meeting Xi, Trump said he would hold off imposing additional tariffs on Chinese imports and delay restrictions against Huawei Technologies Co., letting U.S. companies resume sales to China’s largest telecommunications equipment maker. Further details on the deal were light though.With China-U.S. trade tensions temporarily out of the way, gold traders’ focus is back toward fundamentals, and “fundamentals are still reasonably ok,” Wei Li, head of iShares EMEA investment strategy at BlackRock, told Bloomberg Television.“We do not expect gold to fall significantly further,” Commerzbank analysts said in a Monday note to clients. “In our view, it is above all the upcoming ECB and Fed rate cuts, and the (geo)political risks, that argue against any pronounced and lasting price slide.”Still, prices were seen remaining under pressure on Monday on improved risk sentiment, with the downside seen at $1,380 and further declines dependent on the dollar strengthening more, Mumbai-based Kotak Securities Ltd. said in a note.In other precious metals, silver fell on the Comex, while platinum declined on the New York Mercantile Exchange and palladium gained.\--With assistance from Shery Ahn, Swansy Afonso and Justina Vasquez.To contact the reporters on this story: Ranjeetha Pakiam in Singapore at firstname.lastname@example.org;Elena Mazneva in London at email@example.comTo contact the editors responsible for this story: Lynn Thomasson at firstname.lastname@example.org, Pratish NarayananFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
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(Bloomberg) -- South African Reserve Bank Deputy Governor Daniel Mminele will step down when his term ends Sunday, fueling speculation he is poised to take the top job at the country’s third-largest lender.Mminele, 54, will be the second deputy governor to leave the central bank in six months after Francois Groepe’s surprise resignation in January. His departure takes the Monetary Policy Committee back to five members after Chris Loewald joined the panel this month, while Kuben Naidoo is the last remaining deputy governor.Mminele’s departure comes as Absa Group Ltd. looks to replace ex-chief executive officer Maria Ramos, who left the Johannesburg-based lender three months ago after a decade at the helm. Mminele is one of a select number of candidates for the job, people familiar with the matter told Bloomberg in February. Absa has said a permanent CEO will take the role next year, while Mminele will need to serve out a six-month cooling off period.Mminele, who has been at the central bank since 1999 and served two five-year terms as deputy governor, has told President Cyril Ramaphosa that he won’t be available to remain in his position, the Reserve Bank said in a statement on Thursday, without providing information about his future plans. He is responsible for financial markets and international-economic relations.Mminele didn’t immediately respond to a request for comment, while Absa declined to comment. Ramos has been replaced on an interim basis by René van Wyk, a former colleague of Mminele’s at the Reserve Bank.“Mminele does have banking experience, but I think the knowledge required to run Absa pertains to retail banking specifically,” said Nolwandle Mthombeni, an analyst at Mergence Investment Managers in Cape Town. “The problem with Absa is largely related to turning around the retail business. The right kind of candidate for that role is someone who can help them win back clients” even though he would be able to help on regulatory issues, she said.Absa is trying to win back market share it lost while Barclays Plc was its controlling shareholder, a relationship that ended in 2017. The stock has underperformed all five of its peers in the FTSE/JSE Africa Banks Index since the London-based lender bought Absa in 2005. Before her departure, Ramos strengthened the executive management teams at both its main retail division and the corporate and investment-banking business.The father of two was educated in Germany and at the London Guildhall University before stints at African Merchant Bank Ltd. and Commerzbank AG, where he was a customer-relations manager in corporate banking and based in Johannesburg.He was seen as one of the favorites to succeed Gill Marcus as head of the central bank in 2014, a job that went to Lesetja Kganyago. If appointed by Absa, he would be the lender’s first black CEO. Mminele, born in the town of Phalaborwa, which borders the Kruger National Park in South Africa’s Limpopo province, can speak English, German and Sepedi.The Reserve Bank governor and three deputies are appointed by the leader of the country for a fixed five-year term. While Ramaphosa met with the central bank’s board, Kganyago and the deputy finance minister two weeks ago to discuss vacancies in the executive leadership, the presidency has not yet made an announcement about replacements for Groepe and Mminele.Mminele’s “exit from the institution is a great loss of institutional knowledge and leadership,” said Peter Attard Montalto, the head of capital markets research at Intellidex. “He was a solid hawk throughout his period on the MPC and a lodestar of monetary policy with his consistency. He was highly respected by investors and banks throughout his tenure.”(Updates to add chart on share price.)\--With assistance from Zoe Schneeweiss.To contact the reporters on this story: Prinesha Naidoo in Johannesburg at email@example.com;Roxanne Henderson in Johannesburg at firstname.lastname@example.org;Loni Prinsloo in Johannesburg at email@example.comTo contact the editors responsible for this story: Rene Vollgraaff at firstname.lastname@example.org, ;Stefania Bianchi at email@example.com, Vernon WesselsFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Oil rose to a five-week high as a huge drop in U.S. crude inventories bolstered the outlook for demand.Futures in New York climbed 2.7% Wednesday after the U.S. Energy Information Administration said domestic stockpiles fell by 12.8 million barrels last week. The biggest decline in American supplies since September 2016 was accompanied by record exports of crude and refined products and gasoline demand that remained near an all-time high.“U.S. exports are going to continue to grow, and that’s a positive for long-term crude balances here,” said Nick Holmes, who helps oversee $16 billion in energy investments for Kansas-based money manager Tortoise. “It’s our expectation that we continue to see draws into the second half of the year.”While the summer driving season typically boosts demand, it was the second week in a row that inventories fell far beyond expectations, countering worries about the economy that have dogged oil prices. With added momentum from the U.S.-Iran standoff in the Persian Gulf, futures have jumped about 10% in the past week.West Texas Intermediate for August delivery rose $1.55 to $59.38 a barrel on the New York Mercantile Exchange. It was the highest closing price for the contract since May 22.Brent for August settlement added $1.44, or 2.2%, to $66.49 a barrel on London’s ICE Futures Europe Exchange. The global benchmark crude traded at a premium of $7.11 to WTI.“This is the market’s reaction to the unexpectedly pronounced fall in U.S. crude-oil stocks,” said Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt. “Apart from crude-oil stock trends, the focus here is also likely to be on gasoline demand” as the northern hemisphere moves into the peak driving season.Plans for a meeting between the U.S. and Chinese presidents at the G-20 summit this weekend have added some optimism that trade talks between the two may be revived. Early next week, the Organization of Petroleum Exporting Countries and its allies are widely expected to extend output cuts at a meeting in Vienna.With imports also down last week, the U.S. was a net exporter of crude and petroleum products for only the third time in records dating back to 1990, the EIA found. Gasoline inventories fell by 1 million barrels, in part due to an explosion and fire at Philadelphia Energy Solutions, the East Coast’s biggest refinery.Philadelphia Mayor Jim Kenney said Wednesday that the 153-year old complex will close within the next month. Gasoline futures closed up 5%, their biggest one-day gain since March 1.\--With assistance from James Thornhill, Saket Sundria, Grant Smith and Alaric Nightingale.To contact the reporter on this story: Alex Nussbaum in New York at firstname.lastname@example.orgTo contact the editors responsible for this story: Serene Cheong at email@example.com, Catherine Traywick, Mike JeffersFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Welcome to the home for real-time coverage of European equity markets brought to you by Reuters stocks reporters and anchored today by Josephine Mason. Reach her on Messenger to share your thoughts on market moves: firstname.lastname@example.org ON OUR RADAR: DRUGS, FASHION AND ... CONSULTING (0617 GMT) European stock futures have opened, as expected, on the back foot with Washington's latest Iranian sanctions and the upcoming G20 summit looming large for investors who prefer the safety of gold and other havens. French business consultancy firm Capgemini has agreed to buy engineering and digital services company Altran for 3.6 billion euros ($4.10 billion) in cash to tap into the fast-growing engineering outsourcing services market.
LONDON/MILAN (Reuters) - Italy's UniCredit has put a possible bid for Commerzbank on ice as the German rival does not want to engage in negotiations so soon after the collapse of merger talks with Deutsche Bank, four sources said. UniCredit had stepped up preparations for a potential takeover of Commerzbank by engaging Lazard and its banker Joerg Asmussen, a former German deputy finance minister, along with JP Morgan, people familiar with the matter said in May.
(Bloomberg Opinion) -- Earlier this month, my colleague Elisa Martinuzzi suggested that merging Deutsche Bank AG and UBS Group AG would, on paper at least, create a European banking champion. She concluded, though, that the regulatory obstacles to such a deal would probably be insurmountable. But there is a three-way combination that could create a regional lender with the heft to take on the U.S. banks without falling foul of national regulators.Jean Pierre Mustier has done much house-cleaning in his two years as chief executive officer of Italy's UniCredit SpA. So it’s not much of a stretch to posit that he might regard himself as the right leader to forge a European powerhouse. And while his current institution owns HypoVereinsbank in Germany, it still depends on Italy for almost half of its revenue.Mustier has already dallied with the idea of buying Commerzbank AG after talks between the German lender and Deutsche Bank broke down in April. Adding Commerzbank would increase his access to the small- and medium-sized German clients known as Mittelstand companies.With Deutsche Bank still in intensive care, the German authorities should welcome the opportunity to see its other problem child adopted by UniCredit for many of the same reasons as they championed the mooted domestic tie-up. But to build a true challenger to the growing U.S. dominance of European lending, Mustier would need to add a third geographic region to his stable – and here his nationality might be key to overcoming tribal objections.As a Frenchman running an Italian-German institution, Mustier would be well-placed to convince the authorities in Paris that Societe Generale SA would thrive under his stewardship.Adding SocGen’s expertise in derivatives would expand the range of balance-sheet tools that Mustier can offer to those Mittelstand companies and other customers in Europe. And the newly merged triumvirate – let’s call it UniComSoc, ignoring the Orwellian overtones – would be a true regional champion. In international bond underwriting, the trio would command a 6.3% market share based on the individual performance of the three banks in the first five months of this year. None of the trio is currently a top ten player; the merged group would rank behind only JPMorgan Chase & Co. with 7.2% of the market, and Citigroup Inc. with 6.9%.In European equity offerings, the merged firm would sneak into a top 10 dominated by U.S. and Swiss firms, again based on market share through May:But in European loans, a market worth almost 300 billion euros ($336 billion) so far this year, the combination would be a market-beating powerhouse with a share of almost 13 percent. Given European companies remain reliant on bank loans rather than the capital markets to satisfy the bulk of their funding needs, that’s the most important reservoir of capital and the one that European regulators would be keenest to see being provided by a leading domestic source.The futures market is now starting to anticipate a cut in borrowing costs from a European Central Bank whose ultra-low interest rates have already weighed heavily on bank profitability. The worsening economic outlook that’s seen European government bond yields drop to record lows this week should add a sense of urgency to the acknowledged need for cross-border banking mergers.If the combination of Deutsche Bank and Commerzbank turned out to be shooting for the moon, maybe Mustier should aim even higher to land among the stars.To contact the author of this story: Mark Gilbert at email@example.comTo contact the editor responsible for this story: Edward Evans at firstname.lastname@example.orgThis 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/opinion©2019 Bloomberg L.P.
(Bloomberg Opinion) -- Ever since Deutsche Bank AG abandoned talks to merge with Commerzbank AG in April, a drip-feed of information on what Germany’s biggest lender plans next has leaked out.For Chief Executive Officer Christian Sewing, the danger is that he finds most of his cards have been played well before he can unveil his overhaul at the end of next month. He can ill afford to disappoint investors. Deutsche Bank has presented four strategic overhauls in as many years, not one of which has been able to stop the shares from plumbing new record lows. The firm is valued at just one quarter of its tangible book value – the steepest discount among its peer group.This week, the Financial Times reported that Sewing will transfer about as much as 50 billion euros ($56 billion) of trading assets – mostly long-dated derivatives – into a so-called bad bank. The firm is also considering plans to close its equities and rates trading businesses outside Europe.Exiting U.S. equities and rates has been a long time coming. A retreat from the U.S. securities business is a shift many (including yours truly) have argued is worth pursuing in light of Deutsche Bank’s sub-scale presence in the market. Global equities has been a sore spot for the firm, racking up annual losses of about 600 million euros, according to estimates from JPMorgan Chase & Co.What investors are still missing, though, is a clearer sense of how a smaller footprint would help restore profitability. Even if Deutsche Bank were able to finance the retreat from capital-intensive businesses without having to tap investors for more funds, sustainable returns remain a distant prospect.The bank had been counting on growing revenue this year to reach a 4% return on tangible equity. Given the dire outlook for trading in the second quarter after a contraction in the first, it’s hard to imagine that objective will be met.Return on tangible equity stood at 1.3% in the first quarter. Further cost-cuts beyond the investment bank may be necessary. According to JPMorgan, annual firm-wide costs may need to drop to 18 billion euros from 22.8 billion euros in 2018 for the firm to stand a chance of reaching a ROTE of 5% or more by 2021.What is also missing so far from Sewing’s vision is a sense of how and where the firm can grow as interest rates are likely to stay lower for longer. At home, the commercial bank, which generates about 40% of revenue, faces stiff competition from savings and cooperative lenders that is squeezing margins.Sewing is considering giving a boost to the firm’s transaction banking business, which tends to be overshadowed by the trading units, Bloomberg News reported in May. What that will mean in practice hasn’t been articulated. To keep up with the competition in payments and cash management, the lender will need to spend on technology. For the commitment to be credible, it will need to come with a big number attached.All that said, Sewing deserves to have a shot at putting his own mark on the company. The merger talks with Commerzbank have overshadowed a lot of his work so far. He has over-delivered on cost-cutting under the existing (if unambitious) plan. But with a German recession just around the corner, time isn’t on his side. He urgently needs to communicate his vision for Deutsche Bank – and on his own terms.To contact the author of this story: Elisa Martinuzzi at email@example.comTo contact the editor responsible for this story: Edward Evans at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Elisa Martinuzzi is a Bloomberg Opinion columnist covering finance. She is a former managing editor for European finance at Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Deutsche Bank is planning to overhaul its trading operations by creating a so-called bad bank to hold tens of billions of euros of non-core assets, a source close to the matter said on Monday. The measures are part of a significant restructuring of the investment bank, a major source of revenue for Germany's largest lender, which has struggled to generate sustainable profits since the 2008 financial crisis. Shares in Deutsche, which have recently traded at record lows, were up 1.4% in late trading in Frankfurt, shedding some of their gains but still topping the list of German blue-chip companies.