DB - Deutsche Bank Aktiengesellschaft

NYSE - NYSE Delayed price. Currency in USD
-0.12 (-1.41%)
At close: 4:00PM EST

8.42 0.00 (0.00%)
After hours: 5:49PM EST

Stock chart is not supported by your current browser
Previous close8.54
Bid8.42 x 46000
Ask8.44 x 42300
Day's range8.41 - 8.47
52-week range6.44 - 9.47
Avg. volume4,647,338
Market cap17.325B
Beta (5Y monthly)1.63
PE ratio (TTM)N/A
EPS (TTM)-1.12
Earnings dateN/A
Forward dividend & yieldN/A (N/A)
Ex-dividend date17 May 2017
1y target est6.26
  • Reuters - UK Focus

    U.S. Fed signals lighter touch on bank supervision, foreign bank oversight

    The U.S. Federal Reserve on Friday signaled it would take a lighter touch when supervising banks, in another win for the industry which has long complained that the regulator's closed-door supervisory process is opaque and capricious. In particular, foreign lenders Deutsche Bank, Credit Suisse, UBS and Barclays should no longer be held to the same supervisory standard as big U.S. banks after shrinking their combined U.S. assets by more than 50% over the past decade, said Fed governor Randal Quarles. "We have been giving significant thought to the composition of our supervisory portfolios and, in particular, to whether and how we should address the significant decrease in size and risk profile of the foreign firms," Quarles, who is also vice chair for Fed supervision, told a Washington conference.

  • Brexit Bulletin: Pound Under Pressure

    Brexit Bulletin: Pound Under Pressure

    Days to Brexit: 14(Bloomberg) -- Sign up here to get the Brexit Bulletin in your inbox every weekday.What’s Happening? The U.K. economy’s post-election economic optimism is quickly disappearing.Boris Johnson’s decisive election win before Christmas was supposed to provide a much-needed fillip for the U.K.’s sluggish growth rate, lifting near-term Brexit uncertainty and finally allowing companies to plan for the future.Still, signs of a “Boris bounce” aren’t too strong. While some private surveys have shown signs of a pick up in sentiment, this week has seen a string of disappointing data, including evidence that the economy was unexpectedly contracting before the vote. Inflation and retail sales reports for December, which included the period immediately after the election, came in well below expectations, suggesting U.K. consumers may be losing some of their resilience.That’s taken a chunk out of the pound, which has fallen more than 1.7% against the dollar this year. Combined with dovish noises from Bank of England policy makers, traders now put the chances of an interest-rate cut later this month at more than 70% — levels which indicate near-certainty for some in the market.Analysts don’t see pressure on the pound ebbing any time soon: Deutsche Bank said today that a rate cut could be followed by a new cycle of quantitative easing. More data is due next week, with the forward-looking Purchasing Managers Index likely to influence whether the BOE takes action“If you look at the fundamental driver behind U.K. economic weakness, it has been Brexit. And the reality is Brexit uncertainty is not going to go away,” George Saravelos, the bank’s global head of currency research, told Bloomberg TV.Beyond BrexitEven after 20 years at the top, Russian President Vladimir Putin still knows how to play power politics. Twitter CEO Jack Dorsey asked Tesla boss Elon Musk how he would fix the social network. How many billionaires are attending next week’s World Economic Forum in Davos, Switzerland?Sign up here to receive the Davos Diary, a special daily newsletter that will run from Jan. 20-24.Brexit in BriefReassurance | EU citizens who have not secured “settled status” by the deadline of June 2021 will not automatically be deported from the U.K., Downing Street confirmed.Big Bong Update | The Brexiteer campaign to raise funds for Big Ben to bong on Jan. 31 continues apace, with more than £222,000 ($289,000) now pledged. Lawmaker Mark Francois, who is leading the bong bid, told the BBC that Brexit-backing businessman Arron Banks has pledged £50,000.Preparation Costs | The U.K. has already committed to spend £6.3 billion on preparations for Brexit, the Institute for Government notes in a briefing paper on government readiness. That’s roughly the equivalent of a railway extension project or two new aircraft carriers, the IfG says. Another £2 billion is set aside for 2020-2021.Tell Us Your Plans | Brexit is two weeks away. We’re curious how you, our loyal Brexit Bulletin readers, are planning to mark the moment. Get in touch and let us know, by emailing brexit@bloomberg.net.Want to keep up with Brexit?You can follow us @Brexit on Twitter, and listen to Bloomberg Westminster every weekday. It’s live at midday on Bloomberg Radio and is available as a podcast too. Share the Brexit Bulletin: Colleagues, friends and family can sign up here. For full EU coverage, try the Brussels Edition.For even more: Subscribe to Bloomberg All Access for our unmatched global news coverage and two in-depth daily newsletters, The Bloomberg Open and The Bloomberg Close.\--With assistance from Greg Ritchie.To contact the author of this story: David Goodman in London at dgoodman28@bloomberg.netTo contact the editor responsible for this story: Adam Blenford at ablenford@bloomberg.net, Chris KayFor 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

    Volatility-Targeting Funds Leverage Up at Fastest Since ‘18 Rout

    (Bloomberg) -- A breed of systematic trader acutely sensitive to volatility is charging into U.S. stocks at the kind of pace last seen before “volmageddon” rocked Wall Street almost two years ago.Volatility-targeting funds are doubling down on equities after geopolitical turmoil that threatened to derail the bull market in the end barely slowed it down. These players buy and sell based on price swings, and their leverage -- a measure of exposure to stocks -- now sits at its 81st percentile since 2011, according to Morgan Stanley.That might be a cause for hand-wringing in some quarters of the market, as it echoes the run-up to February 2018, before a swift de-risking by systematic players is thought to have intensified a market plunge. Algorithmic traders are often seen as weak hands because many strategies are at the mercy of signals that can flip on a dime.“Considering that systematic strategies are very levered, traditional investors’ gross and net exposures are very high, and retail traders are also more levered-up -- that leaves us susceptible to a real draw-down,” said Alberto Tocchio, chief investment officer at Colombo Wealth SA, a Swiss wealth manager that oversees 2.5 billion Swiss francs ($2.6 billion).Fortunately, conditions look very different from 2018, Nomura’s Masanari Takada wrote in a note today. Pointing to a lack of fear in the VIX options market, the quant strategist says any short-term dips would likely be treated by investors as buying opportunities.Meanwhile, the trigger fingers of vol-targeting funds, which by one estimate hold around $400 billion, may be firmer than thought after an extended stretch of tranquility, according to Deutsche Bank AG strategists led by Binky Chadha. These strategies typically load up on stocks when markets are calm and sell when volatility hits.“They would need to see a large and sustained spike in vol for their selling thresholds to be hit,” the team wrote.Animal SpiritsStill, there’s little doubt that equity positioning by systematic strategies is stretched. The leverage of short-term trend-followers known as CTAs is at the 78th percentile since 2011, according to Morgan Stanley.And animal spirits are in the air, with Bank of America Corp. strategists led by Michael Hartnett writing this week they’re staying “irrationally bullish until peak positioning and peak liquidity incite a spike in bond yields and a 4-8% equity correction.”The possibility that CTAs sell en masse on a change in market dynamics “cannot be ignored,” Nomura’s Takada wrote in an email.“If any unpredictable but tiny shock causes a correction in the upward momentum of a U.S. stock price index like the S&P 500, systematic trend-followers are likely to rush into exiting from their current bullish trades simultaneously,” he said.\--With assistance from Justina Lee.To contact the reporter on this story: Ksenia Galouchko in London at kgalouchko1@bloomberg.netTo contact the editors responsible for this story: Blaise Robinson at brobinson58@bloomberg.net, Yakob Peterseil, Sam PotterFor 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.

  • Deutsche Bank Adds More QE to a Growing List of Pound Risks

    Deutsche Bank Adds More QE to a Growing List of Pound Risks

    (Bloomberg) -- Want the lowdown on European markets? In your inbox before the open, every day. Sign up here.The pound is sliding as souring economic data raise the prospect of an interest-rate cut as soon as this month. Deutsche Bank AG says that may just be the start of a longer easing cycle that piles extra pressure on the U.K. currency.Not only does George Saravelos, the bank’s London-based global head of currency research, see a decline in borrowing costs in January, he thinks policy makers may opt for a drop in March, too, and then possibly begin quantitative easing.“Even if you get some election bounce, we don’t think it’s going to be sustained and the risk is the Bank of England has to do Q-eternity,” Saravelos told Bloomberg Television’s Francine Lacqua on Friday. In 2015, he was part of a team that forecast correctly that the pound would drop to its weakest level since 1985 in the following years.Sterling extended its decline against the dollar to as much as 0.4% after his comments, exacerbating a selloff that was triggered by an unexpected plunge in U.K. retail sales. The data increased bets the BOE may lower borrowing costs this month, with money markets pricing in a more than 70% chance of a cut on Jan. 30, up from 62% on Thursday.Traders had been speculating that the central bank will ease rates at Mark Carney’s last MPC meeting as BOE governor after a flurry of dovish comments from policy makers and a series of disappointing economic data releases.That, coupled with fears of a chaotic divorce from the European Union, has overshadowed euphoria from the Conservatives’ election victory in December and weighed on the pound this year.Saravelos said the pound appears overpriced and should be trading closer to 87 or 88 pence per euro, compared to about 85 pence on Friday. He added that the bank is negative on sterling.“The economy is in recession, the data so far is pointing in that direction,” Saravelos said. “If you look at the fundamental driver behind U.K. economic weakness, it has been Brexit. And the reality is Brexit uncertainty is not going to go away.”Starting from the aftermath of the financial crisis, the U.K. central bank bought a total stock of 435 billion pounds ($568 billion) of bonds in an effort to revive the economy. The BOE has leeway for any return to QE, with a self-imposed limit of buying 70% of outstanding gilts. The European Central Bank is able to purchase 33% of outstanding debt from qualifying member states.Investors are now turning their attention to impending purchasing mangers’ indexes for further signs of the BOE’s direction.Sterling retreated 0.3% to $1.3040 as of 2:45 p.m. in London. The yield on 10-year U.K. government bonds dropped a sixth day to 0.64%, on course for its longest falling streak since August.“Clearly, there is a chance for a decent rebound of the PMIs next week and this may stay the BOE’s hand,” said Valentin Marinov, a strategist at Credit Agricole SA. “That said, following this week’s weaker CPI and retail sales, the bar for stable rates is getting very high.”What Bloomberg Intelligence Says”The BOE may run out of patience if PMI data next week don’t see a decent bounce. There is low visibility as to whether growth will rebound after the election, so it may be best to risk manage receiving positions in GBP short-end rates given current pricing for a cut. The cross-market theme of gilts outperforming bunds and U.S. Treasuries remains.”\-- Tanvir Sandhu, Chief Global Derivatives Strategist(Adds context on QE, additional comments from Saravelos from seventh paragraph.)\--With assistance from Greg Ritchie and Anooja Debnath.To contact the reporters on this story: Love Liman in Stockholm at jliman1@bloomberg.net;William Shaw in London at wshaw20@bloomberg.netTo contact the editors responsible for this story: Dana El Baltaji at delbaltaji@bloomberg.net, William ShawFor 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.

  • U.K. Retail Sales Extend Worst Run on Record

    U.K. Retail Sales Extend Worst Run on Record

    (Bloomberg) -- Sign up here to receive the Davos Diary, a special daily newsletter that will run from Jan. 20-24.British consumers shunned stores during the crucial Christmas trading period, confounding predictions of a rebound in spending and stoking speculation that the Bank of England will cut interest rates this month.The pound fell after the report, the latest in a string of disappointing U.K. data in recent days, and traders moved to price in a 75% chance of a cut at the BOE’s Jan. 30 meeting.The volume of goods sold in stores and online fell 0.6% in December, confounding expectations of a 0.6% increase. Sales excluding auto fuel dropped 0.8%. The period included Black Friday and Cyber Monday, when price cuts would be expected to attract shoppers to stores.Weak growth and inflation figures this week have added to expectations, fueled by dovish comments from BOE Governor Mark Carney and other policy makers, that a rate cut could be imminent. Crucially, the sales survey was taken between Nov. 24 and Dec. 28, meaning much of it encompassed the period following Boris Johnson’s commanding win in the Dec. 12 general election -- undermining speculation the economy will see a bounce amid reduced political uncertainty.What Our Economists Say:“Whether the Bank of England cuts interest rates on Jan. 30 now hangs in the balance and makes the PMI survey next week a make-or-break data point.”\-- Niraj Shah, Bloomberg Economics. For the fullU.K. REACT, click hereRetail sales have fallen or stagnated in each of the past five months, the longest run without growth since records began in 1996, the Office for National Statistics said Friday. A 1% decline in the fourth quarter was the largest since the start of 2017 and weighed on the economy.The pound erased its earlier gains after the data, to trade down 0.1% at $1.3063 as of 10:10 a.m. London time.Stores widely reported having to offer deep discounts to beat off competition and lure customers in the runup to Christmas. Prices as measured by the retail sales deflator fell 0.6% on the month.That’s hit stores from Marks & Spencer Group Plc to John Lewis Partnership Plc, while the British Retail Consortium described 2019 as the worst year on record for the sector with revenue down on 2018. Retailers have underperformed the U.K. market as a whole this year.Sales in December fell across the board, with non-food sales declining 0.9% and food sales dropping 1.3%, the most since December 2016. Petrol stations and online retailers had a better month.There were also sweeping declines during the quarter, with clothing and footwear down 2.3% and non-store retailing falling 3.2%.With some BOE officials indicating signs of a post-election recovery may be enough to stave off a cut, the most high-profile figures before the Jan. 30 decision are now the Purchasing Managers Indexes due to be released next Friday.(Adds pound, chart.)\--With assistance from David Goodman.To contact the reporters on this story: Andrew Atkinson in London at a.atkinson@bloomberg.net;Lucy Meakin in London at lmeakin1@bloomberg.netTo contact the editors responsible for this story: Fergal O'Brien at fobrien@bloomberg.net, Andrew Atkinson, Brian SwintFor 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.

  • Deutsche Bank-Led Group a Step Closer to Jindal India Deal

    Deutsche Bank-Led Group a Step Closer to Jindal India Deal

    (Bloomberg) -- A Deutsche Bank-led consortium’s efforts to buy out the debt of a power plant operator in eastern India have advanced, after no rival bidder emerged.The struggling utility is Jindal India Thermal Power Ltd., one of a string of power plants being put up for sale by banks stuck with their defaulting debt.The sector has been hit hard by oversupply in recent years, a consequence of a costly push to bridge India’s once chronic power deficit and expand reach to under-supplied rural areas. Power generators form a significant chunk of India’s $130 billion bad loan pile.The consortium offered 24 billion rupees ($339 million) in cash to settle the company’s 76 billion rupee debt including interest due as of end March, which is currently being restructured, said the people, asking not to be identified citing confidentiality. The unsolicited offer was opened up to competing bids in an auction but no rival emerged by the deadline last week, the people said.Success for the Deutsche Bank group deal could help preserve the 33.98% equity stake that the BC Jindal Group held as of March 31, 2019.BC Jindal Group company shares jumped. Jindal Photo Ltd. rose as much 12.2%, the most in seven months. Jindal Poly Films Ltd. shares were up as much as 20.3%, the most in over six years.The offer would effectively mean that creditors, led by Punjab National Bank, would recover a fraction of their outstanding debt holdings, the people said. Typically, if lenders do not agree with a debt-recast plan, they have the option of taking the company to bankruptcy.A spokesman for Deutsche Bank declined to comment and a representative for Punjab National Bank didn’t immediately respond to an email seeking comment.(Adds details, Group share prices)\--With assistance from Denise Wee.To contact the reporters on this story: Bijou George in Mumbai at bgeorge66@bloomberg.net;Suvashree Ghosh in Mumbai at sghosh186@bloomberg.netTo contact the editors responsible for this story: Andrew Monahan at amonahan@bloomberg.net, Denise WeeFor 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.

  • U.S. Curbing Early Access to Sensitive Data Threatens Arms Race

    U.S. Curbing Early Access to Sensitive Data Threatens Arms Race

    (Bloomberg) -- The Trump administration plans to restrict the news media’s ability to prepare advance stories on market-moving economic data, according to people familiar with the matter, in a move that could create a logjam in accessing figures such as the monthly jobs report.Currently, the Labor Department in Washington hosts “lockups” for major reports lasting 30 to 60 minutes, where journalists receive the data in a secure room, write stories on computers disconnected from the internet, and transmit them when connections are restored at the release time.The department is looking at changes such as removal of computers from that room, and an announcement could come as soon as this week, said the people, who spoke on condition they not be identified. While the rationale was unclear, the government has cited security risks and unfair advantages for news media in prior changes to lockup procedures.Lockups, which are permitted but not required by government regulations, have been a mainstay for U.S. media for almost four decades. They have been designed to give reporters time to digest figures on market-moving data and make sure they are accurate before distributed en masse to the public. Statistics agencies and central banks in the U.K. and Canada use similar lockup procedures.The U.S. move would upend decades of practice, and media organizations including Bloomberg News and Reuters have challenged prior changes to procedures. The shift could also spur an arms race among high-speed traders to get the numbers first and profit off the data, raising questions about fairness in multitrillion-dollar financial markets.Michael Trupo, a spokesman for the Labor Department, didn’t respond to multiple requests for comment. The Commerce Department -- which provides advance access to its reports such as gross domestic product and retail sales at the Labor-hosted lockups -- referred questions on the matter to Labor.Without news services transmitting their reports at the release time and allowing additional access points, the government may have to prepare its websites to handle potentially heavier loads under the new system, which could mean adding security measures or increasing the traffic capacity.“Obviously some firms are bigger than others, some have more resources than others, and some will make a choice in the environment that might ensue to dedicate more resources to this, so I do think the playing field at the margin would be less level,” said Stephen Stanley, chief economist at Amherst Pierpont Securities.Previous PlanIn 2012, the Labor Department under the Obama administration sought to alter lockups to require journalists to use government-owned computers to write their stories. Officials at the time framed the change as addressing security risks.After protests from Bloomberg News and other news organizations, and a congressional hearing in which editors testified, the department agreed to allow the media to continue using their own equipment and data lines. Reporters are required to leave mobile phones and other electronic devices in lockers outside of the lockup room, along with personal effects such as umbrellas and purses.The Labor Department move would follow a similar decision by the U.S. Department of Agriculture in 2018 to scale back lockups covering farm products, particularly the closely-watched monthly crop forecasts that typically move markets in soybeans, corn and wheat.From 2018: What’s a ‘Lockup’ Anyway and Why It Matters for CropsAgriculture Secretary Sonny Perdue said at the time that because of technological changes, journalists can now get information to their readers faster than the USDA can put it on its website, creating an unfair advantage.The USDA’s releases since the change haven’t been without hiccups: In November, for about six minutes after the release time, the website produced an error message.The Federal Reserve separately hosts its own media lockups where journalists get advance access to interest-rate decisions, meeting minutes and industrial-production data, and write their stories on computers in a secure room.“The in-depth media analysis is sought to further understand the details, get a trusted interpretation and also make sense of a market move that does not match your own expectation,” said Delores Rubin, a senior equity trader at Deutsche Bank Wealth Management. “It is hard to say if the impact will create more volatility on economic data releases or a pause as traders wade through the details of the data or await the media analysis.”Government BurdenWithout news services like Bloomberg News and Reuters transmitting their reports at the precise release time and allowing additional access points, the lockup changes put the burden on the government to ensure that its website remains accessible while being bombarded by everyone from algorithmic traders to the general public.U.S. government websites aren’t immune from attack or technical issues that could limit public access. In 2013, the Obamacare website crashed when millions tried to access it and register under the then-new health care program, preventing Americans from enrolling in coverage until months later, after a frantic repair effort.Earlier this month, a pro-Iran group hacked a U.S. government website -- the Federal Depository Library Program -- and posted messages related to the U.S. killing of a top Iranian commander.The Obama administration’s Labor Department said in its November 2016 transition document that it took “costly security measures” including a technology upgrade to protect the data, and “significant personnel and financial resources are also required to host each lockup.”(Adds economist’s comment in eighth paragraph.)\--With assistance from Michael Riley, Alyce Andres, Vildana Hajric and Emily Barrett.To contact the reporters on this story: Katia Dmitrieva in Washington at edmitrieva1@bloomberg.net;Vince Golle in Washington at vgolle@bloomberg.netTo contact the editors responsible for this story: Margaret Collins at mcollins45@bloomberg.net;Scott Lanman at slanman@bloomberg.netFor 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.

  • Simply Wall St.

    Introducing Deutsche Bank (ETR:DBK), The Stock That Slid 70% In The Last Five Years

    While it may not be enough for some shareholders, we think it is good to see the Deutsche Bank Aktiengesellschaft...

  • Reuters - UK Focus

    LIVE MARKETS-Sweet first session for European bourses

    Welcome to the home for real-time coverage of European equity markets brought to you by Reuters stocks reporters and anchored today by Thyagaraju Adinarayan. European bourses closed the day in positive territory as they got a boost from the news that China's central bank is cutting the amount of cash that all banks must hold as reserves, releasing around 800 billion yuan ($114.91 billion) in funds to revive the economy. The pan-European index was up 1% and the euro-zone blue chip index was up 1.37% at the end of the session, led by banks up 2%.

  • The Greek stock exchange was the surprise star performer of 2019
    Yahoo Finance UK

    The Greek stock exchange was the surprise star performer of 2019

    Deutsche Bank said the Athens Exchange outpaced all rivals for total returns in 2019.

  • China M&A Bankers Face Another Grim Year

    China M&A Bankers Face Another Grim Year

    (Bloomberg Opinion) -- You’d expect the world’s second-largest economy to have a bigger presence on the world stage. But in mergers and acquisitions, China’s presence has been shrinking for years, and 2020 is unlikely to be any better.In 2016, the country was the world’s largest acquirer of overseas assets after the U.S. It tumbled to eighth place this year, trailing Japan and even Singapore, according to data compiled by Bloomberg. While the phase-one trade deal between Washington and Beijing may ease some tensions, frosty relations between China and many developed countries appear set to persist. Add tightened credit to this protectionist mix, and China’s acquisitions have little chance of regaining the heights of 2016, when state-owned China National Chemical Corp. agreed to pay a record $43 billion to buy Swiss agrochemical maker Syngenta AG.Washington turned more hostile to Chinese purchases of U.S. assets after Donald Trump gained the presidency, and since has become only more strict. The Committee on Foreign Investment in the United States, a federal panel that reviews acquisitions on national-security grounds, even started including purchases of data on American customers in its checks. The Trump administration has also sought to enlist U.S. allies in squeezing out Huawei Technologies Co. as a supplier of fifth-generation wireless equipment.Such actions have been seen as a clear shot at the Made in China 2025 plan, which set targets for the country to become a leader in critical technologies. Chinese venture capital investment in the U.S. fell 27% to $1.1 billion in the first half of 2019, from $1.5 billion in the July-December period last year, according to Rhodium Group LLC, an independent research firm.Europe, previously more receptive to Chinese investment, has turned a lot less welcoming on the sale of technology and infrastructure. Regulators took their time approving what could have been China’s largest overseas deal of 2019 — the 9.1 billion euro ($10.2 billion) takeover of Portuguese utility EDP-Energias de Portugal SA, prompting state-owned buyer China Three Gorges Corp. to pull out in April. Germany, meanwhile, is looking at putting tighter restrictions on Chinese buying following high-profile investments in companies such as Deutsche Bank AG and industrial robot maker Kuka AG in recent years. A push by lawmakers to ban Huawei from its 5G network threatens to further chill relations. Even President Xi Jinping’s signature Belt and Road Initiative, which prompted a wave of Chinese acquisitions in countries that have signed on to the trade-infrastructure campaign, has faced a backlash.Beijing’s drive to control debt has played a part in tamping down deals. After the ill-fated spending sprees of conglomerates such as HNA Group Co. and Anbang Insurance Group Co., now being unwound, companies have become more cautious. Chinese banks are less aggressive when it comes to lending for overseas purchases, according to Bee Chun Boo, M&A partner at Baker McKenzie’s Beijing office. The average size of China’s foreign acquisitions has shrunk by two-thirds since 2016 to $74 million, from $230 million (a figure that already strips out the Syngenta deal). Chinese buyers have stopped seeking controlling stakes to avoid raising protectionist hackles, and are searching out non-Chinese buying partners.Anta Sports Products Ltd.’s $5.2 billion purchase of Finland’s Amer Sports Oyj is an example of what the typical Chinese acquisition may look like in coming years. Anta led an investor group that included Lululemon Athletica Inc. founder Chip Wilson, and the target — a tennis racket maker — was in a non-sensitive sector. With the environment souring in the U.S. and Europe, Chinese acquirers will look more within Asia. In September, China Telecommunications Corp.’s entered a $5.4 billion agreement to set up a third major Philippine telecom operator with two local partners.The home market may provide more promising action for China-focused bankers in the year ahead. Beijing is opening its financial sector, inviting more foreign banks, insurance providers and other companies to set up shop. In November, Chubb Ltd. paid $1.5 billion to boost its stake in Huatai Insurance Group, and Allianz SE forked out about $1 billion for part of Goldman Sachs Group Inc.’s stake in Taikang Life Insurance Co. Deal activity may accelerate in 2020, when foreign securities firms, futures businesses and life insurance companies will be allowed to fully own their Chinese units.As financial companies enter, others are leaving. Chinese buyers are picking up the pieces as Carrefour SA and Metro AG sell the bulk of their local operations, joining Tesco Plc and Distribuidora Internacional de Alimentacion SA in giving up on a tough retail market. Nestle SA is another international company considering options for its Chinese units.Advising on exits is a shrinking business by nature, though, and unlikely to compensate for the fall-off in China’s outbound deals. No China M&A banker is going to be partying like it’s 2016.\--With assistance from Yuan Liu and Elaine He. To contact the author of this story: Nisha Gopalan at ngopalan3@bloomberg.netTo contact the editor responsible for this story: Matthew Brooker at mbrooker1@bloomberg.netThis 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.

  • Deutsche Bank to no longer pay for advice from Cerberus- source

    Deutsche Bank to no longer pay for advice from Cerberus- source

    Cerberus, one of Deutsche Bank's largest shareholders, will no longer provide paid advice to the bank on how to run its business, a person with knowledge of the matter said on Monday, a role that has been criticised for potential conflicts of interest. The following year, Cerberus' consulting arm also began advising the bank on how to cut costs and find new sources of revenue, for which Deutsche paid fees.

  • Deutsche Bank to no longer pay for advice from Cerberus: source

    Deutsche Bank to no longer pay for advice from Cerberus: source

    Cerberus, one of Deutsche Bank's largest shareholders, will no longer provide paid advice to the bank on how to run its business, a person with knowledge of the matter said on Monday, a role that has been criticized for potential conflicts of interest. The following year, Cerberus' consulting arm also began advising the bank on how to cut costs and find new sources of revenue, for which Deutsche paid fees.

  • Bloomberg

    Deutsche Bank Advisory Contract With Cerberus Is Set to Lapse

    (Bloomberg) -- Deutsche Bank AG’s controversial advisory contract with Cerberus Capital Management LP probably won’t be renewed when it expires at the end of this month, people familiar with the matter said.The German lender last year hired a unit of the U.S. private equity firm, which is one of Deutsche Bank’s largest shareholders, to help it identify savings and improve liquidity management. The mandate, overseen by Cerberus President Matt Zames, raised concerns that the U.S. investor may gain access to privileged information that other shareholders don’t have.To help ease such concerns, Cerberus was banned from buying or selling Deutsche Bank shares for the duration of the mandate.“Cerberus Operations and Advisory Company has been a great support since mid-2018 and helped us to get our deep transformation going,” a Deutsche Bank spokesman said in a statement. “Now it is all about execution.”Cerberus separately praised Deutsche Bank Chief Executive Officer Christian Sewing’s performance without providing further details on the mandate. “We remain confident in his team’s ability to execute on the restructuring plan to improve the bank’s financial and operating performance.”Deutsche Bank is the most high-profile among several investments Cerberus has made in Europe’s beaten-down bank stocks. It’s also an unusual one because as a minority shareholder with about 3% of the voting rights, the firm can’t control the lender or take it private as buyout firms typically do, limiting its options to boost the value of the holding.Deutsche Bank’s share price has dropped by more than half since Cerberus first announced taking a stake in November 2017. The firm also holds a 5% stake in Commerzbank AG, the second-largest listed bank in Germany. That stock has lost almost half of its value since the investment was first announced.Cerberus had backed merger talks between both German lenders earlier this year, according to people familiar with the matter, but those discussions ultimately failed.To contact the reporters on this story: Steven Arons in Frankfurt at sarons@bloomberg.net;Nicholas Comfort in Frankfurt at ncomfort1@bloomberg.netTo contact the editors responsible for this story: Dale Crofts at dcrofts@bloomberg.net, Ross Larsen, Christian BaumgaertelFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • Operation Twist Makes India Long-Tenor Debt Asia’s Top Performer

    Operation Twist Makes India Long-Tenor Debt Asia’s Top Performer

    (Bloomberg) -- Benchmark 10-year bonds rallied from near a three-month low after the central bank said it will buy 100 billion rupees ($1.4 billion) of longer-tenor bonds while selling shorter debt in a move reminiscent of the U.S. Federal Reserve’s Operation Twist.The yield on the 2029 debt fell as much as 16 basis points to 6.59%, the most in more than two months, making it Asia’s top performer. The 7.57% 2033 yield also slid 20 basis points. Yields on the 6.35% 2020 bond -- a very short-end paper -- jumped 20 basis points.The move had been suggested by some traders and strategists as a way to pass on more of the central bank’s five rate reductions this year to businesses and individual borrowers. With investment and consumption both weak in India, policy makers are trying to spur credit and lift growth from a six-year low.“The relentless steepening of the yield curve is getting pacified by the RBI coming in and signaling ‘I am here to support,’” said Lakshmi Iyer, chief investment officer for fixed income at Kotak Mahindra Asset Management Co. in Mumbai. “This move brings some sort of a sanity check.”READ: Time for Unconventional RBI Measures, Bond Manager SaysThe Reserve Bank of India in a statement late Thursday said it will buy 100 billion rupees of the 2029 debt and sell an equal amount of notes maturing next year in an auction on Monday.The concept is similar to Operation Twist used by the Fed in 2011-2012 in an effort to cheapen long-term borrowing and spur bank lending. The Fed then swapped short-term Treasury securities for longer-term government debt, which reduced the gap between two- and 10-year yields.In India, the difference between the benchmark 10-year yield and the RBI’s policy rate was 160 basis points before the announcement. That’s way higher than the average spread of 55 basis points seen during the 2015-2017 easing cycle, according to Deutsche Bank.The steepening of the curve in the longer end reflects concerns about the government adding to record borrowing as it gets ready to prime the economy. The slowdown has reinforced doubts about the administration meeting its budget aim of 3.3% of GDP this fiscal year.“The RBI should increase the intensity of its Operation Twist via more vigorous switches of government bonds focused on securities in the tenure of 7-10 year plus,” said Madhavi Arora, economist at Edelweiss Securities Ltd.Future operations will depend on the success of Monday’s auction, traders say.“There’s limited appetite for short-end bonds so the RBI will need to offer higher yields,” said Naveen Singh, head of fixed-income trading at ICICI Securities Primary Dealership.To contact the reporters on this story: Subhadip Sircar in Mumbai at ssircar3@bloomberg.net;Kartik Goyal in Mumbai at kgoyal@bloomberg.netTo contact the editors responsible for this story: Tan Hwee Ann at hatan@bloomberg.net, Jeanette Rodrigues, Ravil ShirodkarFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • Ex-Deutsche Bank Executive Facing Jail in Italy Still Has Clout

    Ex-Deutsche Bank Executive Facing Jail in Italy Still Has Clout

    (Bloomberg) -- On his third anniversary as head of Deutsche Bank AG’s asset and wealth management unit, Michele Faissola held a town hall meeting where staff were asked to wear black baseball caps embroidered with the number 3. Even his new boss, then-Chief Executive Officer John Cryan, donned one.It was September 2015, and the high-flying banker with an affinity for fast cars and complicated deals was at the pinnacle of power. Or so he thought.A few weeks later the company announced he would leave, along with several senior executives who had thrived under the previous CEO, Anshu Jain. Cryan and Faissola clashed about strategy, but Germany’s largest lender was also under pressure from at least one European financial regulator to clean house, according to people with knowledge of the matter. Regulators were concerned at the time about a widening series of scandals at Deutsche Bank.Fast forward to the present, and Faissola is facing almost five years in prison after his conviction and sentencing by an Italian court last month for helping Banca Monte dei Paschi di Siena SpA hide losses with complex derivatives trades between 2008 and 2012. Faissola, who declined to comment for this story, has denied wrongdoing. His lawyer in Italy has said he and other defendants are planning to appeal.The scandals have left deep scars on Deutsche Bank, once the world’s largest financial institution by assets and foremost trader of fixed-income securities. They continue to cripple the company, which has paid almost $20 billion in fines and legal costs and suffered grave damage to its reputation.‘Anshu’s Army’Faissola’s former colleagues -- once referred to as “Anshu’s Army” -- have moved on. The former co-head of investment banking, Colin Fan, now works for SoftBank Group Corp.; the other co-head, Robert Rankin, dabbles in fintech; Jain himself has settled in as president of Cantor Fitzgerald LP in New York.Not so Faissola. The 51-year-old Italian banker continues to have influence at the Frankfurt-based lender through his job as an adviser to the Qatari royal family. Members have held a combined stake of at least 6% and as much as almost 10% in the bank for half a decade, jointly making them the largest shareholders and one of the most powerful outside voices. And they have a lot to be unhappy about: The bank’s share price has fallen more than 75% in that time.Faissola still talks to executives close to the top of Deutsche Bank, according to two people with knowledge of the interactions. He knows the bank’s trading arm and its asset and wealth management operations inside out, and his advice has focused on those units. One senior official said he talked to Faissola after he left the bank about a potential merger with Credit Suisse Group AG, in which the Qataris also own a stake.The Qataris were driving forces in Deutsche Bank’s decision to oust Cryan last year and, more recently, have been putting pressure on Chairman Paul Achleitner to intensify the search for his successor, people familiar with both matters have said.They also pushed to name German lawyer Stefan Simon to the bank’s supervisory board in 2016. Simon, who advised several Deutsche Bank executives, including Faissola, during the investigation of the bank’s role in the manipulation of a benchmark interest rate known as Libor, became chief administrative officer this year. Faissola testified during the probe but was neither a target nor accused of any wrongdoing.It’s not clear if Faissola played a role in those personnel decisions or how much he speaks for the Qataris when he communicates with bank executives.A Deutsche Bank spokesman declined to comment, and the Qatari government communications office didn’t respond to questions on behalf of the royal family. More than a dozen people who know Faissola and agreed to be interviewed asked not to be identified so they could speak candidly.Qatari LinksThe links between the former trader and the Qataris run deep. Faissola has been CEO of a family office called Dilmon since January 2018, according to his LinkedIn profile. The company belongs to Sheikh Hamad bin Khalifa Al Thani, a former emir of Qatar who owns a stake of at least 3% in Deutsche Bank through his Cayman Islands-based investment vehicle Supreme Universal Holdings Ltd.A relative, former Qatari Prime Minister Sheikh Hamad bin Jassim Al Thani, known as HBJ, owns at least another 3% through a separate company called Paramount Services Holding Ltd.HBJ first bought Deutsche Bank shares in May 2014, paying 1.75 billion euros ($1.9 billion) at the time for a stake of 5.83% that’s now worth about 400 million euros. He later split his holdings with the former emir, and both have since invested more money in the lender. Their joint holding was just under 10% as of July 2016, the bank has said.Since July 2018, Faissola has served as a director of Heritage Oil Ltd., a Jersey-based exploration company acquired by a subsidiary of Al Mirqab Capital, an investment vehicle controlled by HBJ. A representative for HBJ declined to comment.Faissola was also appointed that year to the supervisory board of French department-store chain Printemps, which was sold to Qatari-owned Divine Investments SA in 2013 by Deutsche Bank’s asset and wealth management division. Faissola, who was head of the unit at the time, was named a director of Divine in September.Rapid RiseIn many ways, Faissola is the embodiment of the pre-crisis trading culture that underpinned Deutsche Bank’s rapid rise. Fresh out of college, he moved to London in 1991 and was hired four years later by the bank’s head of global markets, Edson Mitchell, the mastermind behind the German lender’s trading expansion.Faissola soon became an influential voice on the rates desk, which specializes in securities tied to interest rates such as government bonds. One former top Deutsche Bank executive described him as a pioneer of interest-rate trading in Europe, praising his work in creating an overarching risk-management system.But years of seemingly limitless growth for the bank’s trading operations came under strain in 2007 as the first signs of the financial crisis appeared. Like many banks around the world, Deutsche Bank began to pivot from selling derivatives to cutting the increasingly toxic assets from its balance sheet. Faissola’s focus shifted to reducing risks rather than taking them on. He was also brought in as a risk manager for the bank’s U.S. mortgages portfolio in 2008 as it was spiraling out of control.It was during that period that Deutsche Bank offered to help Monte Paschi. The Italian lender had suffered a crippling loss of more than 300 million euros on a previous derivative structured by the German lender, and it was concerned that it might be put under administration should that loss show up in its annual report, Bloomberg News first reported.Italian prosecutors alleged that Faissola’s desk designed a two-pronged trade for the Siena-based bank in 2008 whose sole purpose was to hide the losses. Faissola has rejected allegations of impropriety, saying the transactions were legitimate, approved by Deutsche Bank’s risk committee and not intended to disguise losses at Monte Paschi.In 2012, Jain appointed Faissola to run the asset and wealth management division -- a move that put him in charge of almost 12,000 people and a unit that accounted for more than 20% of Deutsche Bank’s total revenue. He remained a key lieutenant in Anshu’s Army and continued to play a role in many of the controversies swirling around the bank.He was among the first people to visit the London apartment of William Broeksmit following the former Deutsche Bank risk manager’s suicide in 2014. Faissola, a family friend, was invited to the dead executive’s home and provided support to family members after their loss, according to people with knowledge of the matter.In 2015, Faissola explored the possibility of spinning off Deutsche Bank’s private-client business, with funding from a private equity firm, but he abandoned the plan in the face of internal opposition, one person said. The business was later sold to Raymond James Financial Inc. After Jain resigned and was replaced by Cryan, Faissola proposed an IPO of the asset management division. Cryan disapproved, and Faissola left soon after.Expensive CarsFaissola told the court in Milan that he made about 8 to 9 million pounds ($10 to $12 million) a year, mostly in bonuses, in the decade before he left the bank, making him one of Deutsche Bank’s highest-paid executives. He has homes in London and Sanremo, the northwest Italian city near where he was born, and owns several expensive cars.Several people who worked for Faissola described him as keen to understand and improve the asset and wealth management division even though he had no background in either.The unit grew during his tenure but still missed its targets. Pretax profit jumped to 1.3 billion euros in 2015 from 940 million euros four years earlier. Although the German stock market provided tailwind -- the main index rose more than 40% over the same period -- pretax profit in 2015 was 400 million euros below the target set in 2012.“Many senior members of Deutsche Bank expected that I would become, at the time of the appointment of Juergen Fitschen and Anshu Jain, CEO of investment banking; instead they sent me to another division that was a less prestigious division at the time,” Faissola testified during the trial in Milan. “But I was very satisfied at the end.”That couldn’t have been his assessment about the trial that ended last month, when a judge sentenced him to 4.8 years behind bars for market manipulation and accounting fraud. Still, Faissola may not go to prison anytime soon, if at all: His appeal could drag on for years.\--With assistance from Nicholas Comfort, Sonia Sirletti, Saijel Kishan and Simone Foxman.To contact the reporters on this story: Steven Arons in Frankfurt at sarons@bloomberg.net;Greg Farrell in New York at gregfarrell@bloomberg.netTo contact the editors responsible for this story: Dale Crofts at dcrofts@bloomberg.net, Robert FriedmanFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • Deutsche Bank (DB) Likely to Slash 2019 Bonus Pool by 20%

    Deutsche Bank (DB) Likely to Slash 2019 Bonus Pool by 20%

    Deutsche Bank (DB) might slash its 2019 bonus pool by 20% due to the ongoing hassles being faced by the bank.

  • Bankers Are Playing With Fire, Once Again

    Bankers Are Playing With Fire, Once Again

    (Bloomberg Opinion) -- As 2019 draws to a close, there’s more than a whiff of banking deregulation in the air. The U.S. has relaxed its lender stress tests and made it easier again for Wall Street to trade using its own funds. In Europe, capital requirements are being softened.The reining in of bank risk after the financial crisis is giving way to a loosening of the rules just as the desperation for yield makes banks more willing to gamble. This seems imprudent: Although banks are safer than they were before Lehman Brothers imploded, critical weaknesses remain.Sheila Bair was chair of the U.S. Federal Deposit Insurance Corp. — the body that preserves confidence in the American banking system — from 2006 through 2011, and she’s a current board member at Industrial & Commercial Bank of China Ltd. As such, she has a unique insight into how far lenders have changed. I interviewed her in Washington DC recently for a Bloomberg Storylines episode about Italy’s Banca Monte dei Paschi di Siena SpA, “How a $450 Million Loss Was Made to Disappear.”In November, 13 bankers from Paschi, Deutsche Bank AG and Nomura Holdings Inc. were convicted for helping the Italian lender hide losses in 2008. It may be an old case but it still serves as a cautionary tale of how banks can massage their numbers.Crucially, as I discussed at length with Bair, banks’ accounts are still impenetrable and reforms have done little to improve transparency. Complex transactions can obfuscate lenders’ true financial health, while more detailed rules have made regulatory reporting and external scrutiny even harder.Here’s an edited transcript of our conversation:ELISA MARTINUZZI: Before Monte Paschi, Lehman Brothers had also used an accounting trick, “Repo 105,” to make its books look stronger. What have we learned from Lehman?SHEILA BAIR: The continued availability of accounting tricks to dress up your regulatory ratios and your public disclosures, I think. And it’s still going on.EM: How far has post-crisis regulation curtailed the banks’ capacity to work around the requirements?SB: Whether it’s [tackling the] accounting gimmicks people used to game their regulatory ratios or just more fundamentally how much capital and liquidity there is in this system, we’ve made them a little better. But we really haven’t made any kind of fundamental reforms.EM: How concerned should taxpayers be?SB: As a citizen worried about the stability of the economy, which relies on a stable financial system, I think people should still be concerned. There’s this kind of assumption that it’s yesterday’s news. And I think that’s probably ill-advised because I think there’s still some real fragility in the system.There’s too much complexity around the financial instruments that we tolerate on regulated banks, the exposures that they take. And frankly, culture too. I mean, do bank managers of integrity use derivatives to dress up their balance sheet or try to hide a risk and losses that they have? No, I don’t think good managers would do that. But there probably is still a culture problem too in the financial services industry that management will entertain strategies like that when they shouldn’t.EM: How has transparency around disclosures improved?SB: If anything, we’ve made it harder because it seems so many of the rules, especially around capital and liquidity are so complex to the extent investors or others — analysts, journalists — want to determine how good those rules are and how effectively banks are complying with those rules. I think the complexity really hinders that kind of outside discipline. It’s kind of an inside game now with the banks and their supervisors.EM: Where do you see systemic risk building up today? Is it away from the banking industry?SB: Nothing’s really outside the banking sector, because we [saw] during the subprime crisis too that all of these toxic mortgages were being passed on broadly to investors.EM: Are memories of the financial crisis fading?SB: It really distresses me, because having lived through that and thinking that we had learned our lesson, to see what’s going on now [simplifying and weakening the post-crisis rules] is just wrongheaded. The debate we should be having is what’s going to happen in the next year or two if the U.S. economy, or more likely the global economy, slides into recession; how well banks are prepared, should they be building a bit more of their capital cushion now?EM: Are you confident we won’t be seeing another Monte Paschi?  SB: No, I'm not confident that we won't. I absolutely would say that I'm not confident we won't. No, no, no.To contact the author of this story: Elisa Martinuzzi at emartinuzzi@bloomberg.netTo contact the editor responsible for this story: James Boxell at jboxell@bloomberg.netThis 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.

  • Oracle’s Need for ‘Steep’ Sales Climb Leaves Street Cautious

    Oracle’s Need for ‘Steep’ Sales Climb Leaves Street Cautious

    (Bloomberg) -- Oracle Corp. slumped Friday after the company’s quarterly sales trailed expectations. Analysts say forecasts suggest a sharp growth acceleration in the fiscal fourth quarter is needed to meet the company’s year-end target.The culprit for the consolidated sales miss was a shortfall in license revenue brought on by continued effects of a sales reorganziation earlier this year, as well as “price discipline,” according to RBC’s Alex Zukin and other sell-side analysts.Fourth-quarter fiscal 2020 faces the most difficult year-ago comparison (4% growth in constant currency) since the company’s second quarter of fiscal 2018. And the environment is tough, Deutsche Bank added.Shares of Oracle fell as much as 3.5%, the biggest intraday decline since Sept. 12. The stock has gained 22% year to date, underperforming both the S&P 500 and its large-cap tech peers.Here’s more of what analysts said following the report:Raymond James, Michael Turits“The company evinced confidence in second half momentum, which it expects to carry into F21 around back office applications (HCM/ERP), cloud @ customer deployments, new versions of Autonomous Database, and diminishing headwinds from data cloud decline”Management also indicated that the second half benefits from transactional (license/hardware) businessTurits believes that for Oracle to see fiscal 2020 constant-currency acceleration following the “slight” misses in the second-quarter actual sales figure and the third-quarter forecast “would mean an extremely steep back half ramp”Given the current set up, the analyst believes that fiscal 2020 revenue growth will decelerate to 2.2% on a constant-currency basisEstimates 2.9% growth for next year, “as the drivers above continue to play out”Rates outperformWhat Bloomberg Intelligence says:“While management commentary about the increased use of Oracle’s new autonomous database product is encouraging with 2,000 new customers and triple-digit growth, weak total license sales shows that clients are taking time to spend more on other new products,” wrote analyst Anurag Rana.Rana doesn’t see this trend changing in the near-term given weakening global macroeconomic conditions that “could even hurt cloud applications sales.”Wedbush, Steve Koenig“We attribute the miss to database license headwinds from a first-quarter tech sales reorg -- which separated cloud and premise sales and likely resulted in smaller deal sizes -- and declining sales of vertical applications licenses”Management was upbeat on prospects for the second half, as large autonomous database transactions get recognized this fiscal year and cloud database velocity picks up, Koenig saidNoted “longer term, these prospects seem promising, but we suspect that any uptick in FY20 year-end tech segment performance would be mostly seasonality (much like in FY19), and a secular upturn in ORCL’s tech segment is likely many more quarters in the offing”The analyst is “more convinced” of Oracle’ progress in cloud applications than cloud infrastructureMaintains neutral rating, as he looks for “meaningful progress” in rebooting database growth on a more sustained basis; price target $56 from $55Deutsche Bank, Karl KeirsteadThe third-quarter forecast for just 1% to 3% constant-currency sales growth implies “a huge growth acceleration” in the fourth quarter “against a very tough compare and in a tougher environment” in order for the full-year to reach Oracle’s forecastKeirstead remains “skeptical about any sustainable growth acceleration”Rates holdTo contact the reporter on this story: Janet Freund in New York at jfreund11@bloomberg.netTo contact the editors responsible for this story: Catherine Larkin at clarkin4@bloomberg.net, Steven FrommFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • Deutsche Bank Affirms Targets, ECB Reduces Capital Requirement

    Deutsche Bank Affirms Targets, ECB Reduces Capital Requirement

    Deutsche Bank's (DB) transformation strategy is in line with the bank's plan and as well ahead in various areas as announced at its Investor Deep Dive.

  • Yes Bank Needs an Arranged Match, Or It’s No Bank

    Yes Bank Needs an Arranged Match, Or It’s No Bank

    (Bloomberg Opinion) -- Yes Bank Ltd.’s latest $2 billion rescue plan was perfect except for one minor detail: Most suitors for the beleaguered Indian lender aren’t the kind the board can really take to meet the regulator for tea. Yet in a five-hour meeting Tuesday, the directors decided to do exactly that. Jane Austen would have been proud of their desperation to marry off Yes.Take Erwin Singh Braich, a mysterious Canadian tycoon offering to post three-fifths of the money together with a partner. Braich says he’s Canada’s richest man, but he “has no headquarters, no banker to manage his money, and is currently living in a three-star motel in the Canadian prairies,’’ write Bloomberg News reporters Natalie Obiko Pearson and Suvashree Ghosh. Braich, they show, is also the subject of a 1999 involuntary bankruptcy — orchestrated, he claims, by opponents, including his brother — which remains undischarged with more than C$13 million ($10 million) in total liabilities. But Yes Bank believes his binding offer deserves to remain on the table, so there it will be.Two other interested buyers — Hong Kong-based SPGP Holdings, bidding jointly with Braich, and London-based Citax Holdings Ltd. — have previously shied away from putting up small sums to acquire Indian businesses in bankruptcy. In a note, Suresh Ganapathy, the Macquarie Capital Securities banking analyst in Mumbai, expressed “serious reservations regarding the quality of the board of directors who are willing to consider these kinds of investors to be large shareholders.”The board doesn’t express an iota of self-doubt. It’s “willing to favorably consider” the $500 million offer by Citax, and decide on allotting shares in the next meeting of directors, “subject to requisite regulatory approvals,” Yes said. If those permissions materialize, they’ll show the Reserve Bank of India, the regulator, to be even more desperate than Yes.As I’ve written before, Yes is skating on a thin layer of capital. And that’s scary. Confidence in India’s bad-loan-laden banking system is ebbing; depositors are seething over regulatory restrictions placed on accessing their own money in a failed cooperative bank. Yes, India’s fifth-largest private-sector lender, can’t be left adrift much longer. But the RBI is so distracted fighting other fires that it would rather not have to think about Yes.If not now, when? It’s been nine months since former Deutsche Bank AG executive Ravneet Gill became chief executive officer with a mandate to clean up the bank, whose asset quality was destroyed by the previous owner-manager’s cavalier underwriting. It’s been seven months since the central bank used special powers to appoint a former deputy governor as a director. But for all the chaperoning and assurances from Gill, especially about raising funds, the outlook is getting bleaker.Gross nonperforming loans jumped to 7.4% of total assets in September from 5% in June. Last month, the bank disclosed that the regulator had found its nonperforming assets on March 31 to be $460 million higher than it had reported earlier. “This is the third year when RBI has identified a divergence in the bank's reported financials,” Moody's Investors Service said, while lowering the bank’s credit rating by two levels to B2, deep into junk-bond territory. That cut is bound to complicate the bank’s ability to attract fresh deposits from institutions at a time when current account and savings account deposits — the cheapest source of financing — plunged 14% from a year earlier in the September quarter.A $273 million share sale in August has shored up the Tier 1 equity ratio to 8.7%, but it’s a temporary reprieve. Yes has a quarter of its assets tied up as credit to shadow banks, real estate, and engineering and construction companies, some of the most dangerously fund-starved industries in India. IDFC Securities Ltd. estimates $7 billion of stressed loans at Yes. Assuming 65% eventually goes bad, the slippage would be more than the bank’s net worth.It’s perhaps time to work off that very assumption. Merging the bank with a bigger franchise such as ICICI Bank Ltd. or Kotak Mahindra Bank Ltd. at a next-to-nil equity value would be a better option than continuing the ongoing fundraising charade. In other words, Yes, which has lost 87% of its market value since August 2018, needs an arranged match, brokered by the RBI.Braich, the Canadian suitor, said he loves the logo: “If it was called ‘No Bank,’ I wouldn’t have been interested.” Even if a joke, this is serious. The shock to India’s broken financial system risks being even bigger than the collapse of infrastructure financier IL&FS Group in September 2018. The regulator must act before Yes Bank becomes, for all practical purposes, no bank at all.  To contact the author of this story: Andy Mukherjee at amukherjee@bloomberg.netTo contact the editor responsible for this story: Patrick McDowell at pmcdowell10@bloomberg.netThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Andy Mukherjee is a Bloomberg Opinion columnist covering industrial companies and financial services. He previously was a columnist for Reuters Breakingviews. He has also worked for the Straits Times, ET NOW and Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.

  • Reuters - UK Focus

    LIVE MARKETS-UK election: The retail gloom before the storm

    * Asia shares fall slightly as trade deadline looms Welcome to the home for real-time coverage of European equity markets brought to you by Reuters stocks reporters and anchored today by Danilo Masoni. With bookies giving a 75% chance of a Tory majority emerging from Thursday's election you would expect shares in British supermarkets to be looking a bit more forthcoming at the moment. "In the event of a Conservative majority government, we would expect sterling to rally", Colm Harney, a UK equity analyst at Sarasin & Partners says, adding that "as a result, large-cap UK domestically-focused names (like Tesco!) would benefit".

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