|Bid||9.13 x 1400|
|Ask||9.14 x 47300|
|Day's range||9.01 - 9.18|
|52-week range||4.99 - 11.16|
|Beta (5Y monthly)||1.61|
|PE ratio (TTM)||N/A|
|Forward dividend & yield||N/A (N/A)|
|Ex-dividend date||19 May 2017|
|1y target est||7.35|
(Bloomberg Opinion) -- The U.K.’s biggest banks have come a long way since the financial crisis, when taxpayers had to rescue them to the tune of tens of billions of pounds. They’re certainly stronger, with comfortable capital buffers, as they head into what could be the worst recession in three centuries.But with the future of the economic rebound still far from certain, they’re having to set aside huge sums of cash to cover the potential loan losses. With rock-bottom interest rates squeezing profit margins, and the terms of Brexit still not finalized, it’s little wonder investors are staying clear.Shares in Britain’s “big four” — HSBC Holdings Plc, Barclays Plc, Lloyds Banking Group Plc and the recently rebranded NatWest Group Plc — have all performed worse than their European peers this year. Lloyds and NatWest, the most exposed to the U.K. economy, have seen more than half of their market values wiped out, leaving them not far off the lows of the financial crisis. Banco Santander SA, which runs Britain's fifth-largest bank, last week wrote $7.2 billion off the value of its U.K. offshoot.One reason for the investor anguish is the potential hit to lenders’ balance sheets from companies and households that won’t be able to repay their borrowings because of the Covid lockdowns. HSBC Chief Financial Officer Ewen Stevenson on Monday told Bloomberg Television that the U.K. is one of the weakest economies he can see globally.Analysts are expecting provisions across the four banks to total $27 billion this year, with HSBC making up more than a third of that. For perspective, they earned slightly less than $19 billion combined last year. Banks elsewhere in Europe — big lenders to small and medium-sized companies — have been making similar writedowns, but so far the U.K. finance industry seems to be in a worse spot.When reporting second-quarter earnings last week, several U.K. lenders said the provisions reflected a slower economic rebound and higher anticipated unemployment. State-controlled NatWest now estimates that British joblessness could top 9%. That would exceed the 8.4% rate at the peak of the financial crisis.The bankers’ conservative assessments are warranted. According to the National Institute of Economic and Social Research, a think tank, unemployment will rise to almost 10% later this year once the government’s furlough scheme ends at the end of October.U.K. banks are especially sensitive to the jobs market because so much of their business is consumer-based. There is a high correlation between unemployment and delinquencies across unsecured lending and credit cards, for example. Mortgages are another critical business, and analysts at Deutsche Bank AG say borrowers’ ability to repay is affected exponentially once unemployment rises past 8%. Deutsche estimates that losses at six U.K. lenders could reach 59 billion pounds ($77 billion) over two years if joblessness hits 10%.The drop in interest rates will also hurt, denting revenue and margins, and putting more pressure on costs. Then there’s Brexit. The possibility of Britain leaving the European Union without a deal features in banks’ most extreme scenario planning, but it still wouldn’t be a happy event during a global pandemic. And while there was a surge in British retail sales in June, a survey of households showed consumer confidence remained weak in July even before Britain started tightening lockdowns again.It’s a good thing capital isn’t an issue — for now. The banks expect their buffers to come under pressure, but the big four all reported an improvement in their common equity Tier 1 ratio in the second quarter, thanks in part to regulatory changes. That will help them weather the storm, but the situation is bleak.This 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/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Over half of Europe’s 30 biggest banks have now reported half year results and set aside £30.4bn between them to cover future losses.
(Bloomberg) -- Barclays Plc, which has been enjoying one of its best ever runs on U.K. stock sales, has lost a key FTSE 100 client and missed out on one of the biggest deals of the year so far.British Airways owner IAG SA has chosen Morgan Stanley to replace Barclays as joint corporate broker, alongside Deutsche Bank AG, according to the company’s website. Barclays had been a broker to IAG for around a decade. IAG also didn’t name the U.K. bank on its list of advisers for a 2.75 billion-euro ($3.3 billion) rights offering announced Friday.Representatives for Barclays and Morgan Stanley declined to comment. A representative for IAG confirmed the change and declined to comment further.Corporate brokers provide go-to advice to U.K.-listed companies on everything from strategy to shareholder engagement for a nominal fee in an effort to secure more lucrative roles on capital market transactions and acquisitions. As such, broker roles are highly contested in the U.K. and the switch at IAG has quickly benefited the new line-up.The airline group is raising new equity to help it ride out the coronavirus crisis. Deutsche Bank, Morgan Stanley and Goldman Sachs Group Inc. were listed as underwriters on the share sale, according to a statement. Rothschild & Co. worked as an adviser.There was no role for Barclays, which has been on a hot streak for such deals in 2020 thanks in no small part to the strength of its corporate broking relationships. Companies including Compass Group Plc, SSP Group Plc and WH Smith Plc have all turned to the bank for emergency fundraisings amid the pandemic.This has put Barclays on course to top the annual rankings for equity offerings in the U.K. for only the second time in two decades. Equity capital markets revenue at the bank rose by almost a third during the first half, according to its latest results.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Higher-than-forecast loss provisions at Lloyds Bank and tumbling profits at Standard Chartered and BBVA spooked investors across the continent.
(Bloomberg) -- The coronavirus pandemic is hampering efforts by Zimbabwean billionaire Strive Masiyiwa to sell a stake in Africa’s largest fiber company.Masiyiwa is seeking buyers for 20% to 34% of Liquid Telecommunications Holdings Ltd. for as much as $600 million, according to four people with direct knowledge of the matter. He needs the money to repay a $375-million loan that was backed by Public Investment Corp., the continent’s largest money manager, they said.The PIC, which oversees the equivalent of $135 billion mainly on behalf of South African government workers, is demanding the issue be resolved by the end of August after granting an extension on the payment earlier this year, the people said. The loan it backed was used to fund a pay-TV venture, which failed last year because Zimbabwe’s economic woes and currency shortages meant the company couldn’t pay suppliers.The 59-year-old tycoon had pledged shares in Liquid Telecom to the PIC as security for the loan, which had been taken out with Deutsche Bank AG. Masiyiwa was planning to repay the debt from the proceeds of an initial public offering in Liquid Telecom, which was scrapped because of volatile equity markets, the people said.Read more: PIC Poised to Take Stake in Fiber Company After Deutsche LoanThe founder of Econet Global Ltd., which has interests in mobile-phone network operators and digital-banking operations across the continent, would rather sell part of his 66% stake in Liquid Telecom to avoid surrendering shares in the company at a discount to the PIC, one of the people said.Masiyiwa hired Goldman Sachs Group Inc. earlier this year to sell the stake, but talks with potential investors started unraveling after the Covid-19 outbreak intensified in March, the people said. Buyers wanted more time to assess the economic fallout of lockdowns to contain the virus on Africa’s economies, they said.Representatives for the PIC, Goldman Sachs, Deutsche Bank and Econet declined to comment.Read more: Zimbabwe President in Fight With Tycoon Over Economy CrashLiquid Telecom operates in 13 countries in East, Central and southern Africa with data centers in Johannesburg, Cape Town and Nairobi. It also offers cloud-based services from Microsoft Corp., according to its website. U.K. development finance institution CDC Group Plc in December 2018 bought almost 10% of Liquid Telecom for $180 million.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- Scale begets scale. In the world of investment banking, the top U.S. firms have powered ahead this year as unprecedented market swings and central-bank spending has fueled a surge in activity across trading and capital markets.Traders at some of Europe’s biggest securities firms — including Barclays Plc, Deutsche Bank AG and Credit Suisse Group AG — have done pretty well too. But not quite as well as their Wall Street peers, which is a reminder of why being big matters. It will be harder for the European banks to protect their profit once the unnaturally favorable trading conditions ease and their loan losses mount because of pandemic-induced recessions. The big American investment banks have been able to make the most of the deeper U.S. capital markets and the fact they have become the dominant players in trading, given them better insights and deeper pockets. Meanwhile, regulation has forced firms to limit their own funds that they put at risk, helping turn the blockbuster client activity into healthy profit.The second-quarter investment banking results are telling. U.S. firms saw fixed-income, currencies and commodities trading revenue more than double in the second quarter, with the market leader JPMorgan Chase & Co. enjoying a 120% gain. Among the larger European securities firms that have so far reported, only Barclays came close to that, with a 95% jump. Deutsche’s equivalent revenue rose 39% and Credit Suisse’s 53%.In equity trading, Barclays — starting from a lower base — was in line with its U.S. peers, whose average revenue increased by 27%. Deutsche has pulled out of this market and Credit Suisse’s income was unchanged. In investment banking and advisory, which makes up a smaller portion of the big lenders’ revenue, sales at the New York giants rose 44%. Over in Europe, Deutsche stood out with a 73% jump in this business, but at Barclays the figure was closer to 5% and at Credit Suisse the increase was 32%.The trillions of dollars that nations have injected into their economies to soften the Covid blow have benefited American firms more. U.S. bond and stock sales rebounded more strongly than in Europe and there was an upswing in commodities, credit and rates trading.And when the pandemic trading boom finally ends, Wall Street’s banks will be able to rely on stronger balance sheets and domestic commercial lending businesses that are more profitable than their European peers. Deutsche and Barclays both echoed warnings from the U.S. that the securities business is indeed normalizing in the second half. That signals more difficult times for the Europeans. Deutsche is counting on expanding market share in its remaining trading businesses to meet financial targets set for 2022. Germany’s biggest bank needs 2% annual growth in revenue to meet that goal, but it isn’t getting much help from its commercial and consumer lending arms. Revenue in its corporate and private banking units was flat over the past 12 months and the squeeze on interest rates will keep hurting profit margins.Barclays’s decision to maintain a large investment bank has provided useful diversification as pandemic-related loan losses in the U.K. rise. The British bank is confident that bad-loan provisions will decline in the second half of 2020, but it may not be able to count on trading to alleviate any future pain.While Europe may have had a “good pandemic” compared with the U.S, that doesn’t extend to its banks. This 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/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Glancy Prongay & Murray Reminds Investors of Looming Deadline in the Class Action Lawsuit Against Deutsche Bank Aktiengesellschaft (DB)
(Bloomberg) -- Some consumer companies beat depressed earnings expectations but the broader outlook for the rest of the year remains murky based on forecasts from chemical producers and banks, particularly with fears of a possible resurgence in virus infections.Gucci-owner Kering SA said it was seeing signs of a recovery through online sales even as its second-quarter revenue plunged. French grocer Carrefour SA was also boosted by a standout performance in its Latin American arm. And though U.K. high street bellwether Next Plc’s sales fell by nearly three-quarters, the expectations were even worse.European companies’ second-quarter reports so far have been good enough to justify the stock market’s rally from the lows in March, though it’s not clear they’re providing fuel for further gains.“Global stock markets appear to be starting to get a little wobbly as the latest earnings numbers start to paint a picture of a global economy that could start to face a challenging time in the weeks and months ahead,” said Michael Hewson, chief market analyst at CMC Markets U.K. A resurgence of virus cases globally “is prompting the realization that hopes of a V-shaped recovery are starting to look like pie in the sky.”German chemicals maker BASF SE poured cold water on recovery hopes as it forecast no significant improvement in earnings in the third quarter and Spain’s Banco Santander SA booked a huge impairment charge as the virus slams key markets.Elsewhere, Deutsche Bank AG reported that its fixed-income results soared in a boost to its turnaround efforts, but its other units are struggling with negative interest rates. Barclays Plc warned on the outlook for U.K. consumers and businesses and housebuilder Taylor Wimpey Plc’s profit was wiped out as the virus shut down construction sites.Key Developments:European stocks are little changed, as gains for retail and real estate shares were offset by declines in autos and banksDeutsche Bank Revamp Gets Another Boost From Trading Rally (2)Gucci Owner Sees Online Leading Recovery After Sales PlungeU.K. Secures Vaccine; U.S. Nears 150,000 Deaths: Virus UpdateHere’s the top virus-related earnings news for today by sector.BanksDeutsche Bank reported its biggest gain in fixed-income trading in nearly eight years, bolstering its turnaround efforts. Catch up with the live blog for Deutsche Bank’s earnings here. DWS Group, the bank’s asset management arm, reported second-quarter net inflows ahead of estimates and said it remains committed to cutting costs. Deutsche Bank shares rose as much as 3.6% before reversing to fall as much as 3%. DWS initially rose too but then fell as much as 3.7%.Barclays Plc warned that consumers and business in the U.K. face mounting challenges as it put aside more provisions for bad loans than expected, offsetting a strong quarter for its investment bank. The stock fell as much as 5.4%. You can catch up with the live blog for Barclays’s earnings here.Banco Santander booked an impairment charge related to the virus that pushed the Spanish lender to a huge loss for the second quarter. The impairment was related to lower anticipated cash flow in its U.K., U.S. and Polish arms and its consumer finance division. Jefferies noted weakness in net interest income and fees. The share fell as much as 5.8% in Madrid.LuxuryKering said it’s seeing signs of a recovery, led by sales online, after revenue for the Gucci owner plunged in the second quarter, albeit by less than estimated. E-commerce sales surged 72% in the period. Bernstein said its earnings topped estimates and the shares rose as much as 6%.Salvatore Ferragamo SpA said it has seen an improvement in sales trends in July after reporting a 47% decline in first-half revenue. Analysts said the sales look disappointing and consensus is likely to be downgraded, but the stock rose as much as 1.5% in Milan.RetailFrench grocer Carrefour SA’s first-half results beat expectations thanks to better-than-expected performances in Spain, Belgium and Brazil, as strict lockdown measures eased in the aftermath of the pandemic. Citi said the Latin American operations were the star. Carrefour rose as much as 2.4% in Paris.U.K. fashion retailer Next’s sales fell by 72% in the second-quarter, not as bad as the 78% decline estimated and with online sales growing. Sales in the quarter were “significantly ahead” of its internal expectations, the company said. Berenberg said the sales beat was driven by online transactions and reopened stores outperforming. Next shares surged in London, rising as much as 10%.German sportswear group Puma AG’s second-quarter loss was narrower than analyst estimates, with sales and gross margins slightly ahead of expectations. Chief Executive Officer Bjorn Gulden called it the “most difficult quarter” of his career and said the threat of more major lockdowns in coming months is “very high,” making it impossible still to provide a 2020 outlook. Morgan Stanley said the update looks in line and Puma rose as much as 4.4%.French pens and shavers maker Societe BIC SA reported a 22% slump in comparable sales growth for the second quarter, citing weak underlying trends worsened by an uneven Covid-19 pandemic impact. BIC rose as much as 7.1% in Paris with analysts praising its cost management.Health CareSanofi raised its 2020 earnings forecast as sales of key drugs like eczema and asthma medicine Dupixent surged, helping to offset any disruption from the pandemic. The French drugmaker also entered into a pact with GlaxoSmithKline Plc to supply Covid-19 vaccine doses to the U.K. Goldman Sachs said the results got a boost from better cost controls. Sanofi rose as much as 1% in Paris.GlaxoSmithKline maintained its 2020 earnings guidance and said second-quarter sales took a hit from the virus disrupting its vaccine business and from destocking in its pharmaceuticals and consumer arms. It added its outlook will be dependent on the timing of any recovery in vaccination rates. The shares fell as much as 1.7%.Medical device maker Smith & Nephew Plc said first-half business was affected by lockdowns, though it noted an improvement in the second quarter as elective surgeries restarted in the U.S. and most European countries, and said China returned to growth in the period. The stock dropped as much as 6.4% and analysts said the update looked “weak.”ChemicalsBASF said it doesn’t expect a significant improvement in third-quarter earnings and said it is still not providing guidance for 2020 owing to the pandemic. Second-quarter sales fell by 12% and the chemicals giant swung to a loss. Baader said the outlook may be taken poorly and the stock fell as much as 5.6%.Polymers and plastics maker Solvay SA’s second-quarter earnings topped expectations despite a hit to sales from weakness in aerospace, autos, oil and gas and construction end markets. It anticipates a challenging third quarter before an improvement thereafter. Solvay shares fell as much as 4.6% and Citi said the investor focus will be on how sustainable the cost cuts Solvay is pursuing are.IndustrialsElectrical power products manufacturer Schneider Electric SE reinstated its 2020 targets and resumed its share buyback program as its organic revenue forecast for the year matched estimates. Its shares rose as much as 5.1% with analysts praising its margins.Irish packaging firm Smurfit Kappa Group Plc reinstated its dividend and said it remains confident in its outlook after reporting a fall in first-half revenue and profit. CEO Tony Smurfit said July has been surprisingly good. Its shares jumped as much as 6.3% in Dublin and analysts said its earnings and box volumes look strong.Dutch oil storage firm Royal Vopak NV’s second-quarter revenue missed estimates and the firm said it cut its cost base in the first half in response to the pandemic disruption. Vopak fell as much as 5.5% in Amsterdam with analysts noting weakness in its chemicals unit and slower delivery of growth projects.AutosAston Martin Lagonda Global Holdings Plc reported a wider first-half loss and free-cash outflows of 371 million pounds ($481 million) as the British carmaker invested in the launch of its all-important DBX sport-utility vehicle. Early signs from China, a key market for sales, are positive. Covid-19 has meanwhile slowed its efforts to reduce dealer stockpiles of its sports cars. The stock rose as much as 11% and Citi said the numbers were marginally ahead of expectations.Travel & LeisureWizz Air Holdings Plc’s first-quarter revenue beat the average analyst estimate as Europe’s third-biggest discount airline also maintained strong market and liquidity positions after a period that marked “one of the most challenging times in the history of aviation,” according to Chief Executive Officer Jozsef Varadi. Wizz shares rose as much as 5.8% and UBS said the quarter was better than anticipated.Spanish airport operator Aena SMA SA said it remains difficult to forecast any trends in traffic given the complexity of the virus crisis as it reported a 65% decline in first-half passenger numbers and swung to a loss. The stock fell as much as 3.3% with Berenberg saying its performance on costs was good but the uncertainty on traffic remains high.ConstructionU.K. homebuilder Taylor Wimpey Plc recorded its first half-year loss since 2009 as the coronavirus lockdown shuttered construction sites and stalled activity in the property market. The loss includes 39 million pounds in additional costs that were directly a result of the pandemic, and total home completions plunged by 58% in the period. The stock slumped in London, falling as much as 9.9% and dragging other homebuilders lower.TechChip-maker AMS AG’s second-quarter earnings beat estimates and it anticipates sales will grow in the third quarter, though this fell short of analyst expectations. Osram Licht AG, the lighting company AMS is acquiring, said profit fell by less than expected due to cost cuts. AMS shares fell as much as 7.3%, while Osram rose as much as 5%.Chip-equipment maker ASM International NV’s third-quarter revenue forecast beat estimates and the firm said it expects its fourth-quarter revenue to hit at least the same level. The stock slumped as much as 7.8% and Kempen flagged up weak order intake.IT services firm Capgemini SA said its first-half revenue rose and it continues to anticipate a gradual recovery for trading in the third and fourth quarters of 2020. Goldman Sachs said the results showed Capgemini’s resilience and the stock rose as much as 4.9% in Paris.TelecomsTelefonica Deutschland Holding AG’s second-quarter earnings came in marginally below estimates but it confirmed its 2020 outlook and said its network expansion plans remain on track. The stock fell as much as 8.6% with analysts saying the guidance is based on an uncertain recovery for roaming revenue.MediaFrench broadcaster Television Francaise 1 SA said its second-quarter advertising revenue fell by 41%, though it said some advertisers have started to return since lockdown restrictions were eased. Goldman Sachs said lower programming costs helped TF1 beat and it rose as much as 4.5% in Paris.Peer Metropole Television SA’s advertising sales in the quarter fell by 26% but analysts said it beat expectations on cost savings. Its shares surged as much as 9.3%.FinancialsJupiter Fund Management Plc said investors were starting to return to the asset manager despite a challenging first half. While clients pulled 2 billion pounds in the six-month period, the second quarter saw a return to moderate inflows driven by its fixed-income strategy and the reversal in markets. The stock rose as much as 3.9% and Citi said its profit came in 6% ahead of consensus.Business ServicesFrench testing and inspection firm Bureau Veritas SA’s first-half revenue beat expectations, though it swung to a loss for the period. It said around a fifth of its revenue, in certification and consumer products, was severely hit by virus lockdowns. The share fell as much as 5% in Paris with Barclays flagging the underperformance of its consumer business.Metals & MiningRio Tinto Plc raised its dividend despite a decline in first-half earnings as strong iron ore prices helped to offset the pandemic’s impact on copper and aluminum. The group said demand for iron ore in China has remained strong. The stock rose as much as 1.9% in London.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- Thomas Gottstein indicated that he didn’t plan to change much when he was promoted to the top job at Credit Suisse Group AG earlier this year. It’s a company he knows well, having worked there for two decades. But a reappraisal of the Swiss lender’s complexity and its appetite for risk appears to have changed his mind. That’s no bad thing.According to Bloomberg News, Gottstein wants to combine the lender’s risk and compliance units, and to reunite the global markets and investment banking divisions that his predecessor split. The overhaul may be announced on Thursday. Credit Suisse is also weighing whether to streamline its international wealth-management business, undoing a structure put in place just two years ago. So much for not messing with things.With the pandemic upending entire industries, the world of banking has changed since Gottstein took over as chief executive officer in February. Losses from bad loans, an accelerated shift to digital banking and a squeeze on margins from rock-bottom interest rates will force financial firms to focus ruthlessly on where they’re strongest, and to hunt for new ways to cut costs.The new boss’s shift in direction reflects the new reality, but it’s also a judgment on Credit Suisse’s trajectory under his predecessor, Tidjane Thiam, who was ousted after a corporate spying scandal.Credit Suisse wouldn’t be the first bank to split and then recombine its investment banking and trading units again. Deutsche Bank AG did the same in 2017. Bringing the trading operations and advisory activities back under one roof will make it easier to cut expenses and simplify businesses. The current structure adds unnecessary layers of management, creates competition for clients between bankers in different departments and gets in the way of the swift execution of deals.At present, the bank runs an international capital markets division, a global markets unit and has trading and advisory activities that report into its other operating units. That has made measuring performance difficult from the outside.Gottstein’s plan to tighten controls by combining the risk and compliance departments is perhaps even more revealing of his concerns about the bank. Yes, it’s an opportunity to reduce duplication, but the bank has also been wagering on risky deals that could damage its reputation and business.Two clients — Luckin Coffee Inc. and Wirecard AG — have been embroiled in scandals. A margin loan to Luckin’s founder prompted an internal review of how the bank lends to billionaire clients — an important part of its expansion under Thiam — including loans backed by illiquid assets. Credit Suisse has also been looking at its supply-chain finance funds (used by companies to pay their suppliers) amid accusations of conflicts of interest over its links to a key investor in the funds, Masayoshi Son’s SoftBank Group Corp.Under Thiam, Credit Suisse cut costs and reduced its exposure to volatile trading revenue. But there were concerns about whether its private banking business would be of the requisite quality to strengthen the franchise. Gottstein’s early moves suggest there’s room for improvement. This 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/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Deutsche Bank AG reported the biggest gain in fixed-income trading in almost eight years as a market rally bolstered Chief Executive Officer Christian Sewing’s turnaround efforts for a third straight quarter.Income from buying and selling debt securities rose 39% from a year earlier, offsetting weaker revenue in asset and wealth management, the lender said Wednesday. While its traders couldn’t quite keep up with the five biggest Wall Street banks, which roughly doubled fixed-income revenue, their gain was the biggest since the third quarter of 2012. Revenue from advising on stock and bond sales as well as mergers increased 73%.The investment bank and particularly the trading business, for years the target of cutbacks, have provided some much-needed support for Sewing this year as he contends with the prospect of surging bad loans while negative interest rates weigh on the corporate bank that’s a key pillar of his strategy. The CEO said that his overhaul of Germany’s largest lender, which he unveiled a year ago, was on track or ahead of plan, while cautioning that the trading environment will probably be less supportive in the second half of the year.“We do expect a normalization” in the trading environment, Chief Financial Officer James von Moltke said in an interview with Bloomberg TV. “The investment bank outperformance in the first half has essentially financed the corona-related impact” on earnings.Even with the expected slowdown, the bank lifted its revenue outlook for the full year slightly, predicting that the top line will be “essentially flat” rather than down.Across Wall Street, the market gyrations in the wake of the pandemic have fueled record investment banking results, with the five biggest U.S. firms disclosing $45 billion in revenue from their trading and dealmaking units in the second quarter.In the U.K., Barclays Plc on Wednesday reported a 60% gain in fixed-income trading, a bright spot as the lender took a 1.6 billion-pound ($2.1 billion) charge to anticipate bad loans from the crisis. Spain’s Banco Santander SA took a $14.8 billion hit from the Covid-19 pandemic, mainly writedowns on past acquisitions, the biggest blow yet to a European bank. Unlike Barclays and Deutsche Bank, Santander has no large trading business to offset virus-related charges.Deutsche Bank rose 2.9% at 9:03 a.m. in Frankfurt trading. The support from the trading boom helped fuel a 19% rally in the shares this year, the best performance of the large European banks.Other Deutsche Bank units have struggled as negative interest rates erode income from lending while market volatility hurts asset and fees for overseeing them. Both asset management unit and retail banking saw lower revenue in the second quarter. On the positive side, the bank saw inflows of 8.7 billion euros ($10.2 billion) at its DWS asset manager in the quarter, better than analysts had estimated.Core bank revenue, which includes only the businesses Deutsche Bank is keeping in its overhaul, rose 6%, driven by the investment bank. The transaction bank -- a centerpiece of Sewing’s effort to wean the lender off its reliance on trading -- saw a 4% increase, reflecting higher credit loss recoveries and a portfolio rebalancing.‘Credibility Boost’“Deutsche Bank’s stabilizing revenue, with accelerating growth in its core transaction banking, trading and underwriting business -- along with operating leverage -- may give a needed credibility boost to its strategic plan,” Bloomberg Intelligence analysts led by Alison Williams wrote in a note. “The market environment has helped, but management is keeping costs aligned with its targets.”The bank set aside 761 million euros for bad loans, roughly in line with a guidance of about 800 million euros it had given in June. Borrowers who had drawn down credit facilities during the early days of the pandemic have already started to pay them back or refinance, boosting the bank’s main measure of capital strength - the common equity Tier 1 ratio -- to about 13.3% at the end of June from 12.8% three months earlier, Deutsche Bank said last week.Unlike its Wall Street rivals and some European peers, Deutsche Bank has set aside relatively small amounts for bad loans, which are expected to surge in the wake of the pandemic. Sewing has argued that his lending standards are high and the firm is less exposed to some of the worst-hit borrowers. He’s also being helped by some of the world’s most extensive government loan guarantee programs set up to combat the economic fallout from the pandemic.(Updates with Barclays, Santander results in seventh paragraph, shares and analyst reaction from eighth.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Deutsche Bank says its transformation is still on track.
Deutsche Bank on Wednesday gave a slightly improved outlook for the year after a better performance in investment banking curbed a second-quarter loss and boosted shares on Wednesday. Executives and analysts said it is starting to pay off, although uncertainties linked to COVID-19 meant a hefty increase in funds set aside to protect against potential loan losses. "It looks like Deutsche Bank is back from the brink of death," Octavio Marenzi, CEO of consultancy Opimas, said.
(Bloomberg Opinion) -- European regulators and policy makers have moved quickly during the pandemic to loosen banks’ capital rules to keep the lending taps open. The latest wheeze is to make it easier for lenders to buy insurance against the risk of their borrowers defaulting. The danger with this fix is that the industry gets hooked on an unproven piece of financial engineering that adds even more complexity to the banking system.It isn’t surprising that the European Commission, which is pushing for the change, is eager to help the lenders. Unlike in the U.S., the continent’s companies rely on bank lending for most of their borrowing. What’s more, the European Central Bank delivered grim news on Tuesday: Some banks might not have enough capital to meet minimum requirements by 2022 in the event of a severe economic downturn.Traditionally, banks have securitized their loans by packaging them together themselves and selling the exposure to other parties. But the Commission is proposing that they should be allowed to do “synthetic securitizations” too, where lenders buy a guarantee against potential loan losses — typically in the form of a derivative — from a hedge fund or insurer. The difference with this approach is that the assets being insured remain on the banks’ balance sheets, meaning they could now free up capital.These so-called “capital-relief trades” were seen as toxic in the aftermath of the financial crisis, when they were used for nefarious purposes, and Europe has taken years to find ways to make them less open to abuse.Regulators have found ways to reduce some of the risk: Under the Commission’s proposal, those providing the credit protection will probably have to post collateral against the transactions, shielding the bank from the danger of a counterparty not meeting its promise to cover losses. But not everyone will be reassured. As I’ve argued before, moving risk outside the regulated banking industry could do more harm than good without adequate protective measures.And this could be a big market, even with the collateral requirement. Yield-starved investors have been knocking on banks’ doors, eager to offer guarantees on anything from U.S. corporate loans to pools of loans to small and medium-sized companies.Hard numbers are hard to come by because most deals tend to be bilateral transactions with little disclosure, but data compiled by the European Banking Authority show synthetic deals are already more popular than traditional securitizations. They had a total value of about 126 billion euros ($148 billion) as of last year. These deals tend to be most popular among the larger banks and attract a narrow group of buyers, according to the EBA. Deutsche Bank AG reportedly cut its risk to the now bankrupt Wirecard AG with one such transaction.Regulators also hope that letting banks treat synthetics like actual securitizations will bring more transparency to the market and make it clearer where risk has shifted.Nevertheless, bank leaders shouldn’t over-rely on the appetite for risk from investors that could just as easily vanish. A rise in company defaults — an inevitability when governments eventually halt their pandemic spending — could dampen demand. Best for Europe’s lenders to focus on how they can help themselves.This 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/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Shareholder rights law firm Robbins LLP announces that a purchaser of Deutsche Bank Aktiengesellschaft (NYSE: DB) filed a class action complaint against the Bank for alleged violations of the Securities Exchange Act of 1934 between November 7, 2017 and July 6, 2020. Deutsche Bank provides investment, financial, and related products and services to private individuals, corporate entities, and institutional clients worldwide.
The Law Offices of Howard G. Smith Reminds Investors of Looming Deadline in the Class Action Lawsuit Against Deutsche Bank Aktiengesellschaft (DB)
(Bloomberg Opinion) -- Of all the giant investment banks to survive the financial crisis, the one with the greatest lingering issues may be Deutsche Bank. That is according to this week’s guest on Masters in Business, David Enrich, finance editor at the New York Times, whose latest book is “Dark Towers: Deutsche Bank, Donald Trump, and an Epic Trail of Destruction.”Enrich discusses how Deutsche Bank changed from a sleepy, provincial bank focused on serving local German markets into a global juggernaut. It was an early proponent of using derivatives both as hedge for client positions, and then later as a profit engine. Deutsche Bank’s rise and stumble began with the $10 billion purchase of Banker’s Trust in the 1990s. Enrich explains how a great migration of traders from firms like Merrill Lynch and UBS to Deutsche completely changed the nature of the bank’s revenue, power structure and culture. Even the bank’s official language changed from German to English. The bank’s internal supervision -- as well as regulators in the U.S. and Germany -- failed to stay on top of the rapid growth in assets and risk. The technology of the bank was a patchwork of incompatible computer systems unable to track all of the bank’s financial positions.Enrich describes how Deutsche Bank became the lender of last resort to Donald Trump in the 2000s. After Trump defaulted on a loan for a Chicago skyscraper, he was cut off from the bank’s commercial lending divisions, but he managed to become a client of its private banking division. Trump’s election as president led to a whole new level of complications for the bank.A list of Enrich’s favorite books is here; a transcript of our conversation is here.You can stream and download our full conversation, including the podcast extras on iTunes, Spotify, Overcast, Google, Bloomberg and Stitcher. All of our earlier podcasts on your favorite pod hosts can be found here.Be sure to check out our Masters in Business next week with Simon Hallett, co-chief investment officer at Harding Loevner, which manages about $70 billion. Hallett also is the owner of Plymouth Argyle Football Club, a League One team based in Plymouth, England.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Barry Ritholtz is a Bloomberg Opinion columnist. He is chairman and chief investment officer of Ritholtz Wealth Management, and was previously chief market strategist at Maxim Group. He is the author of “Bailout Nation.”For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Deutsche Bank, in a revamp of its policies for fossil fuels, said on Monday that it would end business activities worldwide related to coal mining by 2025 at the latest. "Compared to international competitors the bank is still lagging behind on climate," it said, pointing to BNP Paribas and Royal Bank of Scotland as front runners. Deutsche Bank said that it would review all of its U.S. and European coal power activities by the end of this year with respect to clients' diversification plans.
(Bloomberg) -- Apple Inc. was started with an underperform rating at Wolfe Research, with the firm expressing a cautious view over the iPhone maker’s prospects just days before it is scheduled to report its third-quarter results.“We do not expect a 5G supercycle, argue against an independent services valuation, and do not consider Apple a stronger company on the other side of the pandemic,” wrote analyst Jeff Kvaal, who issued a $315 price target on the stock.Shares of Apple fell as much as 4% on Friday, although it pared much of that decline and last traded down 0.8%. The stock has risen more than 60% off a March low; Wolfe argued that Apple’s fundamentals “can’t support the move” seen over the past few months.Much of Apple’s recent advance has been related to the upcoming launch of a 5G version of the iPhone. Wolfe downplayed the tailwind this product could represent. “We believe Apple’s iPhone 12 orders into its supply chain are flat to below last year’s iPhone 11 orders,” the firm wrote. It added that iPhone sales “decelerated sharply during the 2008 recession,” a trend that suggested similar weakness in the current economic environment.Bearish ratings on Apple are somewhat rare, as only four firms tracked by Bloomberg recommend selling the stock. To compare, 29 firms have a buy rating and nine have a neutral view.However, Wolfe is not the only firm to express skepticism about the scale of Apple’s recent advance. Earlier this month, Deutsche Bank confessed it was “surprised at both the speed and magnitude of the rebound” in Apple shares, adding that the move “has us nervous.” The average analyst price target stands at nearly $373. While this is up from $305 at the end of April, it suggests upside of just 1% from the current share price.Apple is scheduled to report third-quarter results on July 30.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Glancy Prongay & Murray LLP Announces the Filing of a Securities Class Action on Behalf of Deutsche Bank Aktiengesellschaft (DB) Investors
(Bloomberg Opinion) -- In the 1990s, so-called blank check companies weren't held in the highest regard. That didn’t matter to this week's guest on Masters in Business, Martin Franklin of Mariposa Capital.Franklin was among those in the early 2000s who revived the use of what are formally known as special-purpose acquisition companies, or Spacs, as vehicles for acquisitions and taking private companies public. Spacs that he headed up or participated in enabled companies such as GLG, Prisa, Phoenix Life, Burger King and Macdermid Specialty chemicals to bypass the process of using initial public offerings.Along the way, these Spacs generated stunning returns. In 2006, he founded Justice Holdings with Bill Ackman of Pershing Square as an investor. Justice Holdings merged with Burger King in 2012, creating a successful exit from closely held ownership. Other exits include Benson Eyecare Corp.; it generated returns of 1,800%. Franklin became head of Jarden Corp., a conglomerate of consumer brands, which he grew from a company with $300 million in annual revenue to one with more than $10 billion. Jarden was acquired in 2016 by Newell Rubbermaid, generating returns of 5,000%.A list of his favorite books are here; a transcript of our conversation is here.You can stream and download our full conversation, including the podcast extras on iTunes, Spotify, Overcast, Google, Bloomberg and Stitcher. All of our earlier podcasts on your favorite pod hosts can be found here.Be sure to check out our Masters in Business next week with David Enrich, an editor at the New York Times. He is the author of "The Spider Network" about the Libor scandal; his new book is “Dark Towers: Deutsche Bank, Donald Trump, and an Epic Trail of Destruction.”This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Barry Ritholtz is a Bloomberg Opinion columnist. He is chairman and chief investment officer of Ritholtz Wealth Management, and was previously chief market strategist at Maxim Group. He is the author of “Bailout Nation.”For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Rosen Law Firm, a global investor rights law firm, reminds purchasers of the securities of Deutsche Bank Aktiengesellschaft (NYSE: DB) between November 7, 2017 and July 6, 2020, inclusive (the "Class Period"), of the important September 14, 2020 lead plaintiff deadline in the securities class action. The lawsuit seeks to recover damages for Deutsche Bank investors under the federal securities laws.
Law Offices of Howard G. Smith Announces the Filing of a Securities Class Action on Behalf of Deutsche Bank Aktiengesellschaft (DB) Investors
The Law Offices of Frank R. Cruz announces that a class action lawsuit has been filed on behalf of persons and entities that purchased or otherwise acquired Deutsche Bank Aktiengesellschaft ("Deutsche Bank" or the "Company") (NYSE: DB) securities between November 7, 2017, and July 6, 2020, inclusive (the "Class Period"). Deutsche Bank investors have until September 14, 2020 to file a lead plaintiff motion.