|Bid||7.10 x 555100|
|Ask||7.10 x 230000|
|Day's range||7.05 - 7.23|
|52-week range||5.78 - 9.69|
|Beta (3Y monthly)||1.50|
|PE ratio (TTM)||N/A|
|Earnings date||30 Oct 2019|
|Forward dividend & yield||0.11 (1.56%)|
|1y target est||N/A|
(Bloomberg) -- The U.K. Serious Fraud Office closed its seven-year investigation into the manipulation of a key interest rate that led to the conviction of five London bankers in a scandal that became an emblem for banker greed following the financial crisis.The end of the probe into the London interbank offered rate, a benchmark tied to trillions of dollars of mortgages and loans, means that prosecutors have dropped a related investigation of three senior current and former Barclays Plc executives.Mark Dearlove, a top official in Japan who is retiring this year, and group treasurer Jon Stone were cleared as part of the decision, Stone’s lawyer, Neil O’May, said. That likely means that Miles Storey, former head of group balance sheet, who was part of the same probe, is no longer a suspect, though his and Dearlove’s lawyers didn’t respond to requests for comment.Libor had been an constant -- but largely unknown -- presence in financial markets before it became synonymous with the financial crisis. Banks and traders manipulated the rate to hide financial problems or profit on trades.The most famous Libor case involved Tom Hayes, a former trader at UBS Group AG and Citigroup Inc. who was ultimately sentenced to 11 years in prison. His trial in 2015 laid bare the tricks and tactics bankers would use to gain even the smallest advantage in complicated transactions.A year later, three other bankers from Barclays, Jonathan Mathew, Jay Merchant and Alex Pabon, were convicted of similar rigging charges involving Libor. Another Barclays banker, Peter Johnson, had pleaded guilty in 2014 as part of the case.The rate rigging investigations also became a symbol of a resurgent SFO, which arrested Hayes knowing that U.S. authorities were already planning to do the same.The investigation also looked into traders at Deutsche Bank AG and Barclays rigging Euribor, a sister benchmark. Christian Bittar, a star trader who earned at $120 million bonus in 2008 alone, is serving a jail sentence after pleading guilty to fraud charges last year. Aspects of the Euribor investigation remain open, the SFO said in a statement.The SFO’s overall results were mixed, with eight people being acquitted in various Libor-related cases.Dearlove, Stone and Storey, who were more senior than those who went on trial, remained under investigation in connection with allegations that Barclays lowered its Libor submissions to make its balance sheet appear healthier during the 2008 financial crisis. It had been the last remaining leg of the Libor investigation.“Jon Stone is obviously enormously relieved that this protracted investigation lasting over seven years into events over a decade ago has at last ended after the SFO has finally understood that there was never any evidence for his involvement in Libor manipulation and that he is indeed innocent of the allegations,“ O’May, a partner at Norton Rose Fulbright, said. “Questions must be asked over the lengthy and tardy investigation, which impacts both on the accused and the justice system.”(Updates with details of senior bankers in second paragraph.)To contact the reporter on this story: Anthony Aarons in London at firstname.lastname@example.orgTo contact the editor responsible for this story: Anthony Aarons at email@example.comFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
BNP Paribas is the frontrunner to take over Deutsche Bank's business that sells certificates and warrants to retail investors, a German newspaper reported on Friday. Boersen-Zeitung, which cited no sources, said analysts had estimated the unit's value at 400-500 million euros ($445-$556 million). BNP declined to comment.
(Bloomberg) -- A group of lenders led by Deutsche Bank AG has been forced to come up with the cash to finance the leveraged buyout of typeface developer Monotype Imaging Holdings Inc. after struggling to find buyers for the debt.The banks had agreed to arrange debt financing to help private equity firm HGGC fund its takeover of the company, which owns the rights to popular fonts such as Times New Roman and Helvetica. After attempting to attract investors for about a month, the banks had to fund a $425 million loan so the deal could close last week, according to people with knowledge of the matter.The offering is the latest in a string of speculative-grade deals that have found tepid reception in recent months as investors shun riskier debt amid signs of a slowdown in the global economy. Banks that helped Apollo Global Management Inc. finance the buyout of photo printing company Shutterfly Inc. were also left holding some of the debt.Mutual funds that invest in leveraged loans have been battered by outflows this year, while collateralized loan obligations -- the largest buyers of such loans -- are at risk of exceeding limits on the amount of risky debt they can own, further crimping demand. Monotype’s loan is rated B2 by Moody’s Investors Service and B- by S&P Global Ratings.Deutsche Bank, the lead arranger for Monotype, is still actively working with money managers that have expressed interest, and aims to complete the syndication as early as next week, said one of the people, who asked not to be identified because the discussions are private.The bank had already placed a $135 million second-lien loan privately before syndication for the rest of the financing began last month.Representatives for Deutsche Bank, Monotype and Palo Alto, California-based HGGC declined to comment.Still HustlingThe banks had made a number of concessions on the pricing and structure of the financing to help drive demand. They reduced the size of the first-lien loan to $425 million from $440 million and sweetened pricing twice, ultimately offering the debt at a discount of 95 cents on the dollar and a spread of 5.5 percentage points over the Libor benchmark.Safeguards governing the loan were also tightened in response to investor concerns, including those limiting the ability of the company to transfer intellectual property -- such as fonts -- outside of creditors’ reach, the people said.While Monotype benefits from recurring subscription revenues and a well-known portfolio of fonts, it also faces competition from “a plethora of free substitutes,” according to Moody’s.The buyout will bring the company’s debt load to around seven times a measure of earnings, according to the ratings firm. The banks are marketing the deal with a leverage ratio of around six times after giving credit to adjustments and expected cost savings, the people said.HGGC agreed to acquire Monotype, which licenses its fonts to companies such as printers and display manufacturers as well as individual users, in July for $825 million.\--With assistance from Sally Bakewell and Jeannine Amodeo.To contact the reporter on this story: Davide Scigliuzzo in New York at firstname.lastname@example.orgTo contact the editors responsible for this story: Natalie Harrison at email@example.com, Boris KorbyFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Berlin-based fintech firm CrossLend has found a new prominent investor in Banco Santander SA.The Spanish lender is leading a 35 million euros ($39 million) funding round for the digital debt market place, it said in a statement on Wednesday. The investment is set to help CrossLend to enter new markets.The new money brings the firms valuation to over 100 million euros for the first time, according to a person familiar with the matter who asked not be identified because the information is private.Founded in 2014, CrossLend provides a marketplace for consumer loans and other forms of debt originated by banks. Buyers are institutional investors such as banks, investment funds and insurance companies.Foreign investors like Santander have recently increased their bets on German fintechs. Investments in the firms reached a record in 2018, topping 1 billion euros for the first time, according to data by Barkow Consulting. After the first six months of this year, investments already stand at around 900 million euros with the first quarter seeing the highest inflows ever.One of the most active foreign investors in Berlin, where many German fintech firms are located, was Goldman Sachs Group Inc. this year.In May, the U.S. bank led a funding round for Berlin-based Elinvar which was founded by former Deutsche Bank AG employees and has built a digital platform to enable lenders to offer their services online. Two month later, it invested 25 million euros in Raisin, an internet platform allowing users to compare bank-savings products.Santander also invested in Berlin-based Bonify which operates a personal finance app.(Bonify investment added in last paragraph)To contact the reporter on this story: Stephan Kahl in Frankfurt at firstname.lastname@example.orgTo contact the editors responsible for this story: Daniel Schaefer at email@example.com, Ingo KolfFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Latitude Financial Group Ltd. scrapped what would have been Australia’s biggest initial public offering of the year, sparking concerns that the future pipeline of IPOs in the nation may dry up.The non-bank consumer lender said in a statement Wednesday it wasn’t proceeding with the share sale, which could have raised about A$1.04 billion ($703 million), citing worries about how the company would trade on debut.“The board and shareholders were conscious of the importance of ensuring a strong after market for the company,” Chairman Mike Tilley said in a statement. “Latitude is a strong business and its management team will continue to execute on the growth strategy.”A lack of appetite for new listings might mean more companies hold off or seek private deals this year, according to Nicholas Guest, a Sydney-based partner at accounting and advisory firm HLB Mann Judd.“I can’t see too many CEOs or boards wanting to push themselves through this process if it’s uncertain,” he said in a phone interview. “If you don’t need to go to the public markets and you’ve got the ability to stay private for longer, you might see that now.”Latitude’s offering would have surpassed Magellan High Conviction Trust’s A$862 million IPO as Australia’s biggest this year, according to data compiled by Bloomberg. The company was scheduled to start trading on Friday.The shares were being offered at A$1.78 each, giving it a valuation of around A$3.2 billion, according to terms of the deal obtained by Bloomberg. The offer price was below an initial indicative range of A$2 to A$2.25. Goldman Sachs Group Inc., Macquarie Group Ltd. and UBS Group AG were lead managers of the deal.Latitude Financial is owned by KKR & Co., Värde Partners Inc. and Deutsche Bank AG, who bought it from GE Capital in 2015. The consumer-focused payments, installment and lending company deferred plans for an IPO a year ago, citing “external market considerations.”Tuesday’s book-build coincided with retail stocks in Australia tumbling on concerns about weak consumer sentiment, as the central bank warned it has yet to see any evidence that tax or rate cuts were boosting spending.Guest said there is also an overhang of caution in the Australian market from troubled IPOs elsewhere in the world, by firms such as office-sharing company WeWork and talent agency Endeavor Group Holdings Inc.(Updates to add comment from fourth paragraph)To contact the reporters on this story: Matthew Burgess in Melbourne at firstname.lastname@example.org;Harry Brumpton in Sydney at email@example.comTo contact the editors responsible for this story: Edward Johnson at firstname.lastname@example.org;Fion Li at email@example.comFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Latitude Financial Group Ltd., an Australian non-bank consumer lender, started gauging demand for its initial public offering, which could raise about A$1.04 billion ($706 million).The company’s shares are offered at A$1.78 each, giving it a valuation of around A$3.2 billion, according to terms of the deal obtained by Bloomberg. The offer price was below an initial indicative range of A$2 to A$2.25.Latitude’s offering would be Australia’s biggest this year, surpassing Magellan High Conviction Trust’s A$862 million IPO priced in August, according to data compiled by Bloomberg. Companies have raised A$5.5 billion via first-time share sales in Australia so far in 2019, compared to A$7.5 billion raised for the same period last year, the data shows.In 2015, KKR & Co. Inc., Värde Partners Inc. and Deutsche Bank AG acquired Latitude from General Electric Co. Latitude has 2.6 million customer accounts and supports more than 1,900 merchants across Australia and New Zealand, according to its website.After the listing, KKR will own 21.4% of the shares in Latitude, while Värde and Deustche Bank will hold 21.5% and 13.5%, respectively, the terms show.Latitude is expected to wrap up gauging demand of institutional investors by the end of Tuesday, with trading scheduled to start on Friday. Goldman Sachs Group Inc., Macquarie Group Ltd. and UBS Group AG are lead managers of the deal.(Updates to add background of Latitude from fourth paragraph)To contact the reporters on this story: Matthew Burgess in Melbourne at firstname.lastname@example.org;Harry Brumpton in Sydney at email@example.comTo contact the editors responsible for this story: Fion Li at firstname.lastname@example.org, Edward JohnsonFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
FRANKFURT/TALLINN (Reuters) - Deutsche Bank did not disclose more than one million suspect money transfers with Danske Bank until February, a person with direct knowledge of the matter said, about five years after a whistleblower flagged suspicious transactions at Danske. Deutsche sent alerts about the suspect money flows involving the Danish bank to Germany's money laundering data authority and state prosecutors, the person said, prompting investigators to seek more information from Deutsche. Prosecutors are now investigating whether staff or management at Deutsche sanctioned the transactions, and whether they subsequently tried to cover them up, the person said, speaking on condition of anonymity.
(Bloomberg) -- The pound swung as traders attempted to read the tea leaves on the likelihood of the U.K. securing a Brexit deal as soon as this week.Sterling pared declines after falling 1.2%, as U.K. Prime Minister Boris Johnson pledged to “get Brexit done” despite skepticism from the European Union. Hedge funds and asset managers have been paring their bets on a weaker pound, according to the Commodity Futures Trading Commission.Traders are repositioning for what could be a swift and brutal move in the currency when the outcome of this week’s negotiations becomes clearer. The clock is ticking down to Thursday’s crunch summit of EU leaders, where Johnson could secure a deal before presenting it to the U.K. Parliament on Saturday, or hurtle faster toward a chaotic exit on Oct. 31.“What’s really important here is that you have engagement,” said Deutsche Bank AG’s global head of currency research George Saravelos, who sees the Brexit talks as a potential game-changer for markets. “There’s a notable shift away from this hard Brexit strategy,” he said in a Bloomberg Television interview.Markets are still relatively optimistic about a Brexit deal, with the pound holding most of its gains after jumping the most in two years last week. The recent rally could have much further to run if a Brexit deal is secured but the pound has far to fall without one, according to Mizuho Bank Ltd. Gains could extend more than 3% to $1.30 if a divorce agreement emerges. If Johnson’s plan fails it could slump almost 3% to $1.22.The pound has seen big moves in recent days, with the spread between the highs and lows in the pound-dollar exchange rate touching the highest level since March on Friday. Deutsche Bank ended its recommendation to sell the pound last week after a positive meeting between Johnson and his Irish counterpart Leo Varadkar.Deutsche Bank’s Saravelos sees the potential for more big swings if this week’s EU summit results in a deal.“If you do have agreement there, there’s quite a lot of risk premium to remove and the sterling price action could be quite quick as we saw on Thursday and Friday,” he said.The market remains overwhelmingly tilted in favor of selling the pound, though both hedge funds and asset managers have lowered their short positions, according to the latest data from the CFTC. Options traders are betting on gains in the short term.The pound may continue to strengthen if negotiations between the U.K. and the EU intensify, according to Goldman Sachs Group Inc.“If the two sides do make more progress toward a deal, continued short-covering from real money investors should prolong the rally,” said analysts including New York-based Zach Pandl, Goldman’s co-head of global foreign-exchange and emerging-market strategy. “We think sterling has further to run.”(Writes through, adds pricing from first paragraph.)\--With assistance from Vonnie Quinn and Guy Johnson.To contact the reporter on this story: Charlotte Ryan in London at email@example.comTo contact the editors responsible for this story: Paul Dobson at firstname.lastname@example.org, William ShawFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Sign up to our Brexit Bulletin, follow us @Brexit and subscribe to our podcast.The Brexit negotiations have taken a step forward with detailed talks set to begin for the first time since Boris Johnson became U.K. prime minister. The pound and U.K. banking stocks surged.After months of war-like rhetoric and threats, Johnson made a vital breakthrough in talks with Irish leader Leo Varadkar on Thursday, paving the way for detailed negotiations to start in Brussels.The two negotiating teams now have a weekend of intensive work ahead of them, examining draft legal text as they try to thrash out a deal in time for the summit of EU leaders on Oct. 17-18.But while the mood has brightened dramatically, the deal is not yet done. For one thing, it’s not clear what concessions -- if any -- Johnson has promised the EU, and whether he can get any deal through Parliament in London. The critical issue remains how to avoid a “hard” border, with customs checkpoints, at the land frontier between Ireland and the U.K after Brexit.“There is a joint feeling that there is a way forward that we can see a pathway to a deal,” Johnson told broadcasters on Friday. “That doesn’t mean it’s a done deal. There’s work to be done.”Key developments:Michel Barnier briefs EU ambassadors, but won’t reveal details of the U.K. concessionsEU agrees for detailed talks to intensify as negotiators aim for a dealBarnier hosted U.K. Brexit Secretary Steve Barclay for “constructive” meeting in BrusselsJohnson is keeping his Northern Irish Allies in the Democratic Unionist Party informed of his negotiations as they are key to ensuring any deal can pass a vote in ParliamentPound surges; RBS and Lloyds shares jumpThe DUP Responds (4:40 p.m.)Democratic Unionist Party leader Arlene Foster has finally given her reaction to Johnson’s latest offer. She reiterated her requirement that any deal must have the consent of the unionist community and fired a warning shot against any attempt to keep Northern Ireland in the EU’s single market. But, crucially, she didn’t go as far as to explicitly rule out supporting the prime minister. She said the party will use its “pivotal role” and “considerable influence” in Parliament to influence the outcome. “There will need to be a clear acceptance that the economic and constitutional integrity of the whole of the United Kingdom will have to be respected as we leave,” she said. “As a consequence of the mandate given to us by voters in 2017 the DUP is very relevant in the Parliamentary arithmetic and regardless of the ups and downs of the Brexit discussions that has not changed.”The DUP is in a formal arrangement to support Boris Johnson’s minority Conservative government and keep it in power. While it only has 10 votes in the House of Commons, some hardline Conservative MPs have indicated they will only back a Brexit deal if the DUP supports it too.U.K. Welcomes EU Talks Decision (3:45 p.m.)Boris Johnson’s office issued a statement welcoming the decision by the 27 other EU member states and saying his government is looking forward to negotiations “in the coming days.”“We welcome this decision, following the constructive meeting between the Brexit Secretary Stephen Barclay and Michel Barnier this morning, and building on the meeting between the prime minister and the Taoiseach yesterday,” Johnson’s team said in the statement. “We look forward to these intensified discussions in the coming days.”Industry Groups Raise Fears About Johnson’s Plan (3:40 p.m.)The U.K.’s aerospace, automotive, chemicals, food and drink and pharmaceutical sectors are concerned about Johnson’s plans for post-Brexit trading arrangements, the BBC reported, citing a letter sent by the group to the government. The plans can pose “serious risk to manufacturing competitiveness,” the letter said.In the letter, the industry representatives express their “growing concern” that British negotiators have dropped existing commitments to maintain regulatory alignment with the EU in relevant sectors. They also demanded reassurances that industry interests will be prioritized.Boris Johnson Is Elusive (2:57 p.m.)Johnson struck a cautious, yet optimistic note, in his first public comments since his meeting with Varadkar.“There is a joint feeling that there is a way forward that we can see a pathway to a deal,” the British prime minister told broadcasters in a pooled interview on Friday. “That doesn’t mean it’s a done deal. There’s work to be done.”He went on to say it “would be wrong of me to giving a running commentary on the negotiations. With the greatest possible respect I think, look at everything I’ve said previously. I think you can draw your own conclusions from that. But let’s our negotiators get on.”Pressed on what solutions he had proposed for the contentious Irish border question, Johnson said: “I can certainly tell you that under no circumstances will we see anything that damages the ability of the whole of the United Kingdom to take full advantage of Brexit, and I think that’s what people would expect, and that’s what I think we can achieve.”The pound, in the meantime, keeps rising. It’s now up 2%.The Devil Is in the Detail (2:06 p.m.)Barnier told the ambassadors that the U.K. had made concessions on both customs and consent without going into detail, an official said. Several ambassadors told him that the only thing that would work would be if the U.K. accepted the need for a Northern Ireland-only backstop, similar to the one thrashed out by the two sides last year, but Barnier refused to confirm that this was the plan, the official said.The issue about consent revolves around how the people of Northern Ireland should give their democratic consent to any agreement. It would involve some kind of regular sign-of from the region’s assembly.Question Is What Might the U.K. Have Given Up (1:47 p.m.)The U.K. conceded on some key issues that were standing in the way, an EU diplomat said following the debrief with Barnier. We are now looking to weekend negotiations, the diplomat representing one of the bloc’s member states, added.A second official, who was present in the debrief, said Barnier didn’t clarify what these U.K concessions might be. It’s an important question given how the U.K. depends on a Northern Ireland unionist party for backing in parliament.The EU Commission’s negotiator hinted that they are related to customs, and that we are heading toward a solution almost identical to the original Northern Ireland-only backstop, the ambassador said, asking not to be named, as the debrief wasn’t public.The bad scenario for this weekend is a backtracking from the U.K, in which case Barnier said he ’d discontinue the talks, the ambassador said. The good scenario is to bring a deal which resembles the original Northern Ireland-only backstop proposal of February 2018.In the latter case, a short technical extension may be required, the diplomat said.The meeting with Barnier was tense, with the French ambassador getting annoyed at one point because of the leaks to the media.Nothing Has Changed on Irish Border (1:38 p.m.)Let’s stay cautious. That is the message that resonated from the EU as speculation amped up on whether or not the divorce talks were headed into the final sprint.After meeting with his U.K. counterpart Stephen Barclay on Friday, Barnier told ambassadors from the 27 member states that there has been enough progress for talks to intensify.That isn’t quite the same as entering the so-called “tunnel” -- the formal Brussels process by which the actual legal text of an agreement is thrashed out in secret -- but it’s a sign both sides recognize a deal is still possible.Is It All Headed Into Secret Talks? (1:30 p.m.)So, EU envoys were briefed about a “possible convergence” between Ireland and the U.K, but a lot remains to be negotiated, a participant in the debrief with Barnier said. Ambassadors will reconvene either Sunday or Monday to take stock of the situation, the official said. The gist is to steer clear of using the word, tunnel, which implies a secretive process.What is obvious is that enough progress has been made to keep negotiating through the weekend with the aim of reaching a deal, instead of declaring talks dead today as Tusk said the plan was.Johnson Keeping Foster in Brexit Loop (12:30 p.m.)Boris Johnson has spoken to Arlene Foster, leader of the Democratic Unionist Party, about his Brexit proposals, according to a U.K. official.His office is keeping the DUP informed of the status of talks, aware that the party’s support for any deal could be crucial to it passing though The House of Commons.Pound Optimism Continues as Banks Surge (11:55 a.m.)The pound is now headed for its biggest two-day rally since before the Brexit vote in June 2016. The latest step higher came after a European Commission spokeswoman labeled the talks “constructive” (see 11:20 a.m.).Its not just the currency where optimism is mounting. Shares in Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc are up more than 9 %.Barclay-Barnier Meeting ‘Constructive,’ EU Says (11:20 a.m.)The European Commission was tight-lipped about the outcome of Friday morning’s meeting between EU chief Brexit negotiator Michel Barnier and U.K. Brexit Secretary Stephen Barclay, with a spokeswoman saying only that the talks were “constructive.”“You can assume they exchanged ideas, discussed many different angles,” Mina Andreeva told reporters in Brussels. “If there’s a will then of course there’s a way, otherwise people wouldn’t be working on this.”A U.K. spokesman used the same word to describe the talks.Brexit Talks May Enter Tunnel, Varadkar Says (11 a.m.)U.K. and EU negotiators may now enter the so-called tunnel for Brexit talks, Irish Prime Minister Leo Varadkar told reporters in Dublin.The focus is now on Brussels, he said, adding that he expects the U.K. will make more detailed proposals. The less said publicly about the talks the better, he said.DUP Lawmaker Warns on Stormont Veto (10.35 a.m.)Removing the so-called Stormont lock from any Brexit deal would leave Northern Ireland’s unionists “marooned,” Democratic Unionist Party lawmaker Jim Wells warned in an RTE radio interview.Northern Ireland Secretary Julian Smith’s suggestion that no one party in the region would have a veto through a vote in the Northern Ireland Assembly “does worry me,” Wells said, adding that “nothing will work unless unionism is signed up to it.”Acknowledging there had been a change of mood in the talks after Varadkar and Johnson’s meeting on Thursday, Wells, who is a member of the suspended Assembly, made clear that any plan which would force Northern Ireland to follow EU rules would be “unacceptable.”Pound Rises Again on Brexit Optimism (10:25 a.m.)The pound has surged 2.5% since Wednesday’s close, with traders jumping on the signs of Brexit optimism.It gained 0.6% to $1.2511 Friday, with Donald Tusk’s comments (see 10 a.m.) adding to the momentum. Deutsche Bank said Thursday evening it was no longer negative on the U.K. currency following a “pivotal moment” in Brexit talks.Options show sentiment on the pound over the next month is now the most positive since Bloomberg began compiling the data in 2003.Ireland: Detailed Talks Will Start (10:05 a.m.)While Thursday’s meeting between Johnson and Varadkar was positive, the “real detailed negotiation and technical work now will begin and that will be in Brussels,” Irish Finance Minister Paschal Donohoe said.Speaking on Newstalk radio, Donohoe pointed to the issue of allowing the region of Northern Ireland to give or withhold “consent” for any new customs system as a crucial area for discussion in the talks. There are differing views in the region on the issue, he said.EU’s Tusk Says ‘Promising’ Signals for a Deal (10 a.m.)EU Council President Donald Tusk gave some mixed messages over the chances of a Brexit deal, saying the U.K.’s proposals aren’t yet realistic but there are “promising signals.”“Unfortunately we are still in a situation in which the U.K. has not come forward with a workable, realistic proposal,” Tusk said in a televised statement in Cyprus. “A week ago I told Prime Minister Johnson that if there was no such proposal by today I would announce publicly there are no more chances” of a deal at next week’s summit of EU leaders.But Tusk said there was some positive news out of Thursday’s meeting between Johnson and Irish Prime Minister Leo Varadkar.“I have received promising signals from the Taoiseach that a deal is still possible,” he said. “Technical talks are taking place in Brussels as we speak. Of course there’s no guarantee of success and the time is practically up, but even the slightest chance must be used.”AB InBev Shelves U.K. Expansion On Brexit Fears (9:40 a.m.)Brewing giant Anheuser-Busch InBev SA put on hold plans to roughly double the size of its U.K. headquarters amid growing uncertainty over Brexit.The Belgian owner of Budweiser and Corona had been in talks to lease additional space in London’s Bureau building, where it already occupies the top four floors, two people with knowledge of the matter said.Fianna Fail Expects Talks to Resume (9.15 a.m.)The leader of Ireland’s main opposition party expects U.K. and EU negotiators to resume formal Brexit talks after Irish PM Leo Varadkar and U.K. leader Boris Johnson met on Thursday.Micheal Martin, who leads the Fianna Fail party, said he would be disappointed if talks don’t restart. “In good diplomacy there has to be accommodation and you can’t have one side losing face against the other,” he told RTE radio.Martin’s party is in a confidence and supply arrangement with the government, so is consulted on most major government decisions. He is likely to have been briefed on Thursday’s meeting.Barclay and Barnier Meet in Brussels (8:30 a.m.)U.K. Brexit Secretary Steve Barclay has arrived at the European Commission in Brussels for talks with the EU’s chief negotiator, Michel Barnier. The two will explore where things stand after Thursday’s meeting between the prime ministers of the U.K. and Ireland and discuss whether to restart more intensive talks.There’s no scheduled time for the meeting to end but Barnier is due to address EU ambassadors at 12:30 p.m. Brussels time.Earlier:Brexit Hopes Rise as U.K. and EU Take a Step Closer to a DealBoris Johnson’s Irish ’Pathway’ Is Full of Holes: Lionel LaurentImagine Brexit Heaven. It Isn’t Easy, I’ve Tried: John Authers\--With assistance from Tim Ross, Charlotte Ryan and Peter Flanagan.To contact the reporters on this story: Ian Wishart in Brussels at email@example.com;Nikos Chrysoloras in Brussels at firstname.lastname@example.org;Tiago Ramos Alfaro in London at email@example.comTo contact the editors responsible for this story: Flavia Krause-Jackson at firstname.lastname@example.org, Thomas Penny, Raymond ColittFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- After spending almost the whole year betting Brexit woes would weaken the pound, traders are now on red alert as the potential for a divorce deal sends sterling flying higher.The U.K. currency jumped the most over two days since 2009 after Thursday’s positive meeting between Prime Minister Boris Johnson and Ireland’s Premier Leo Varadkar. That was followed by further supportive comments, before a recommendation that Britain and the European Union enter into line-by-line negotiations on a Brexit accord.Markets are taking these developments to be a game-changer. One-month options have never shown a stronger bias in favor of contracts to buy the pound, based on Bloomberg data going back to 2003. U.K. bank stocks surged along with domestically focused equities and government bonds sank for a third day.The “pivotal moment” of a meeting between the British and Irish leaders was enough to convince strategists at Deutsche Bank AG to terminate a recommendation to sell sterling. Further progress on talks before the end of the month would risk greater pain for traders betting against the currency, and also spell danger for holders of U.K. government bonds and FTSE 100 stocks.“We cannot recall a time during the Brexit process of the last year at which the Irish government raised expectations to this extent,” wrote Oliver Harvey and George Saravelos, strategists at Deutsche Bank, who forecast correctly in 2015 that the pound would drop to its weakest level since 1985 in the following years. “We are no longer negative on the pound.”The pound stormed higher after Varadkar and Johnson said Thursday they could see a pathway to a deal before the Brexit deadline of Oct. 31. While much uncertainty still remains, if Ireland -- one of the most important protagonists in talks -- sees a way forward, that could at the least help avoid a crash exit, the worst-case outcome for the U.K. economy and the pound.European Council President Donald Tusk said Friday he has received “promising signals” that a Brexit deal is possible. A meeting between the European Commission’s chief negotiator Michel Barnier and his British counterpart Stephen Barclay was also described by both sides as being “constructive.” Barnier recommended that detailed talks can begin in earnest.Risk reversals, a barometer of market sentiment and positioning, surged for options that benefit from a stronger sterling. And demand for pound calls, which give the right to buy the currency, outweighs that for puts at a 2:1 ratio since the Johnson-Varadkar meeting, according to data from the Depository Trust & Clearing Corporation.It’s potentially bad news for hedge funds and asset managers, which were structurally short the U.K. currency, holding a net position close to record highs, according to U.S. Commodity Futures Trading Commission data.The pound gained 1.9% to $1.2678 by 3:00 p.m. in London Friday, following a 1.9% jump on Thursday. U.K. government bonds fell, sending 10-year yields 11 basis points higher to 0.70% as a Brexit deal may bode well for the economy and inflation.The currency may rally even more should a lack of bad news between the negotiating parties begin to turn into materially good news, according to Nomura International Plc strategist Jordan Rochester. The bank is recommending investors short the euro versus sterling. The pound jumped 1.4% to 87.20 pence per euro, reaching its strongest level since May.The U.K.’s FTSE 100 index rose 0.5%, but underperformed a rally of nearly 2% for the STOXX Europe 600 Index as a stronger pound may dent earnings from abroad. Both Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc climbed more than 12%, rallying with homebuilders, domestically focused stocks on the FTSE 250 index, and Irish equities.Shorts WhackedInvestors remain more cautious on sterling’s longer-term prospects. A September fund manager survey from Bank of America showed the U.K. has been the least favored region by investors in terms of equity allocation globally. Thirty percent of fund managers said they were underweight U.K. stocks.While demand for options that look for a weaker pound has waned, the market is still biased in favor of downside protection. That may partly reflect the dollar’s allure amid global growth concerns and trade jitters. A further improvement in market sentiment could come from trade talks between the U.S. and China, and that in turn may see bets on a stronger pound gain additional traction.“Momentum feeds momentum in sterling,” said Lars Merklin, a strategist at Danske Bank A/S. “Without more details it is impossible to say this time is the big one where a deal gets done.”(Updates with Bank of America survey, Danske comment.)\--With assistance from Blaise Robinson.To contact the reporters on this story: Vassilis Karamanis in Athens at email@example.com;John Ainger in London at firstname.lastname@example.orgTo contact the editors responsible for this story: Paul Dobson at email@example.com, Neil ChatterjeeFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Sign up to our Brexit Bulletin, follow us @Brexit and subscribe to our podcast.A palpable feeling of optimism over a potential Brexit deal rippled through markets after U.K. Prime Minister Boris Johnson met Irish premier Leo Varadkar. And Deutsche Bank AG is one of those convinced it’s now time to buy sterling.“We cannot recall a time during the Brexit process of the last year at which the Irish government raised expectations to this extent,” wrote Oliver Harvey and George Saravelos, strategists at Deutsche Bank, ending a recommendation to sell the currency. “We are no longer negative on the pound.”Sterling climbed the most since March after Varadkar and Johnson said Thursday they could see a pathway to a deal before the Brexit deadline of Oct. 31. While much uncertainty still remains, if Ireland -- one of the most important protagonists in talks -- sees a way forward, that could help avoid a crash exit, the worst-case outcome for the U.K. economy and the pound.Johnson’s meeting with Varadkar was a “potentially pivotal moment,” Harvey wrote. “We are turning into optimists.”Deutsche Bank’s shift in view is mirrored by those trading the currency. Options have turned the most positive on record for the pound against the dollar over the next one month. That may reflect bets on a deal or hedges against a further rally for those who have short positions.The pound gained 0.2% to $1.2463 by 9:00 a.m. in London Friday, following a 1.9% jump on Thursday. U.K. and Irish government bonds rose to send 10-year yields down by one basis point to 0.57% and by seven basis points to 0.01% respectively. The U.K.’s domestic-focused FTSE 250 stock index gained 0.8%.Thursday’s bounce seemed to confirm lingering speculative short pound positions are being unwound, said Koon Chow, a strategist at Union Bancaire Privee. Yet there may be no way to judge whether the optimism will last, according to Societe Generale SA analysts.The EU’s chief negotiator, Michel Barnier, will meet U.K. Brexit Secretary Steve Barclay Friday in Brussels to try to map a potential route forward, with just three weeks left until the Oct. 31 deadline. U.K. and EU officials said it would be difficult to reach an agreement before next Thursday’s summit of European leaders.\--With assistance from Vassilis Karamanis.To contact the reporter on this story: John Ainger in London at firstname.lastname@example.orgTo contact the editors responsible for this story: Paul Dobson at email@example.com, Neil ChatterjeeFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg Opinion) -- If the market is right, the chance of a resolution to the Brexit nightmare has just been transformed. After Ireland’s Taioseach Leo Varadkar briefed the press on his lengthy one-on-one talks with British Prime Minister Boris Johnson, currency traders turned what had already been a good day for the pound into one in which sterling at one point made its greatest gain in more than two years. For some context, this is what has happened to the pound against the dollar since the beginning of September, when Johnson’s gambit to prorogue Parliament appeared briefly to have made a “no-deal” Brexit a virtual certainty:Unlike any of the big lurches in sterling that preceded it, the news that caused this dramatic leap had nothing to do with goings-on in Westminster. It all boils down to some remarkably positive words from Varadkar. He can now “see a pathway to a possible deal” – and he thinks it possible to reach that deal in the week before the European Union’s summit on Brexit.Both sides agreed not to release any details. But in comparison with the negativity that preceded it, the latest development justifies the optimism. Leo Varadkar is now the single most important player in the Brexit drama.The entire issue of Brexit at this point boils down to the problem of the Northern Irish border. It is impossible for the whole of the U.K. to leave the EU’s customs area without turning this border back into a customs border. That, in turn, would require physical infrastructure, something Ireland has refused to countenance. This is reasonable given the commitments made by the U.K. under the Good Friday Agreement, which resolved Northern Ireland’s long-lasting “Troubles.”This effectively makes Varadkar the EU's chief arbiter of whether any deal is acceptable. That’s because the other EU countries would feel obliged to support a continuing member, rather than give way to a member that is leaving. To do otherwise would send a dreadful message to other smaller countries that might consider leaving.Varadkar has been studiously cautious. He said almost nothing positive about the proposal to resolve the issue that Johnson published last week. As even the Northern Irish business community said the plan was worse than the “backstop” proposal put forth by Johnson’s predecessor Theresa May, which Parliament voted down, this wasn’t surprising. And earlier this week, after Johnson spoke with Angela Merkel, Germany’s chancellor, the briefing from Downing Street could scarcely have been more negative.In this context, with an obstacle that seems almost impossible to surmount, and with no obvious previous attempt by Johnson even to try to surmount it, such positivity from Varadkar is extraordinary. It really does suggest that there is a game-changer. The fact that neither side has leaked the new proposal is also healthy, as it suggests that they have something worth discussing.Sterling’s move therefore makes sense. There is plenty more downside if the U.K. crashes out of the EU without a deal; but the chance that it could reach an agreement by the end of this month, the best available outcome at this point, had seemed impossible. With deep negativity toward the pound, it was therefore primed for a big move in response to any genuinely positive news.The crucial question if the pound is to retain its gains: What on earth is Johnson proposing? Let us assume that he is dealing in good faith. If so, at this point, it is hard to see what could spark such positivity from Varadkar other than a customs border through the Irish Sea. This would settle all of Dublin’s concerns; it would be simple and relatively easy to enforce. But it would also entail a further split of Northern Ireland from the rest of the U.K. Many in the mainland would have little problem with this, but the idea is anathema to the unionist community in Northern Ireland itself, and to many enthusiastic Brexiteers on the mainland.Until now, the Democratic Unionist Party – the main unionist party in Northern Ireland – and Conservative Brexiteers have exercised a veto over all attempts to break the deadlock this way. If Varadkar reaches a deal with which he is satisfied, would these parties then move to block it?According to at least one foreign exchange analyst, they may no longer have that power. George Saravelos, currency strategist at Deutsche Bank, points out that the U.K. is currently slated to leave the EU without a deal on Oct. 31. If any deal to result from the Johnson-Varadkar talks were vetoed in Parliament, the U.K. could then only avoid a potentially disastrous no-deal exit by asking the EU for an extension – and that extension could be vetoed by any single EU member. In other words, potential rebels, in Britain and Northern Ireland, could be told: Take this deal and live to fight another day, or take responsibility for the chaos of a no-deal exit. Such an exit would hurt the U.K. much more than the rest of the EU.That makes parliamentary rebellion far harder this time than it was earlier in the year. It also justifies the currency market’s positive reaction. But the currency volatility won’t go away just yet. It is still hard to believe that this intractable issue can be finessed and, to quote Varadkar, “there’s many a slip between cup and lip.”(Corrects the description of the pound’s gain in the first paragraph.)To contact the author of this story: John Authers at firstname.lastname@example.orgTo contact the editor responsible for this story: Beth Williams at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.John Authers is a senior editor for markets. Before Bloomberg, he spent 29 years with the Financial Times, where he was head of the Lex Column and chief markets commentator. He is the author of “The Fearful Rise of Markets” and other books.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
The number of suitors for a minority stake in EWE has been boiled down to two as the one of the year's biggest utility deals in Germany edges towards the finishing line, three people close to the matter said. A consortium comprised of Australian infrastructure investor Macquarie and German insurer Allianz is vying with French buyout group Ardian for the stake, which could be valued at 1.2 billion to 1.4 billion euros ($1.3-$1.5 billion), they said. EWE and the suitors either declined to comment or were not immediately available for comment.
In a rare intervention, Deutsche Bank's regulators are blocking a banker backed by its largest shareholder, Qatar, from a seat on the supervisory board because of a conflict of interest, according to two people with knowledge of the matter. Deutsche Bank chair Paul Achleitner had announced in August the appointment of former UBS manager Juerg Zeltner, praising him as a valuable addition and "a top-level European banker with proven expertise". Zeltner was also to represent the interests of Qatar's royal family - a top shareholder in the German lender.
(Bloomberg Opinion) -- Attempts to accelerate the shakeup of German banking haven’t had much success in the past year. First, talks to combine two state-owned regional lenders fell apart; then Deutsche Bank AG and Commerzbank AG tried but (for good reason) were unable to find a way to make a merger work. Now a third combination is on the table.This time too, any real excitement about needed consolidation in a deeply fragmented market is premature. Putting together a regional, public-sector bank, Helaba, with an asset management business, DekaBank, is but a baby step toward the industry’s restructuring. Plus political goodwill appears to be lacking still for the transformational, and expensive, adjustments needed to revive the companies’ profitability.State-backed lenders control about 25% of the nation’s banking assets and cooperative banks another 10%, creating fierce, low-margin competitors to the third pillar of German banking: private commercial lenders such as Deutsche Bank and Commerzbank. Earning a decent return has become difficult for everybody.A year ago, Germany’s state-backed lenders considered an ambitious plan to reorganize one part of the country’s public-sector finance sector: the Landesbanken, whose business models were shown to be deeply flawed by the financial crisis. Landesbanken invest money for local savings banks (or Sparkassen) and have ventured out internationally and taken on more risk. Weakened by losses on everything from toxic asset-backed securities to shipping loans, they’ve received several bailouts since the crisis.Indeed it was a capital shortfall at one Landesbank, NordLB, that encouraged discussions last year to combine it with another, Helaba. Coming just after the first Landesbank privatization, of HSH Nordbank, the deal would have marked an important step in rationalizing these institutions. Ultimately, having one Landesbank catering to the nation’s 380 or so savings banks — rather than half a dozen — is probably sufficient.Yet the NordLB plan needed the backing of the two federal states that control the lender, and local governments haven’t exactly been jumping at the chance to loosen their grip. Private buyers also walked away from a bid for NorldLB.It’s no suprise then that the latest attempt at a big German merger goes in a different direction. Helaba is largely controlled by the savings banks rather than directly by local government and Deka is the asset management unit of the savings banks, making a combination easier to achieve (or at least that’s the hope). Having a new, bigger entity with about 260 billion ($286 billion) euros of assets might even attract other Landesbanken to join the club.Still, this all still leaves the future of the ailing NordLB in the hands of the states of Lower Saxony and Saxony-Anhalt. Worse, the states are about to give it more cash in a rescue that could further distort competition, a violation of European Union state aid rules.As things stand, the states will inject 1.7 billion euros into NordLB, with another 1.14 billion euros coming from the German Savings Bank Association (DSGV) and publicly owned savings banks. To stop it breaching state aid rules, the recapitalization must pass a so-called private investor test: The overhauled business needs to look like something a normal investor would back.In fairness, the plan is ambitious. NordLB anticipates shrinking its balance sheet from about 150 billion euros to 95 billion euros, refocusing on its regional business and ultimately cutting its cost to income ratio below 50% by 2024. By European standards that would be an extremely efficient bank. The EU average cost-income ratio is closer to 70%.The European Commission is still reviewing whether the plan adds up to state aid. It’s a tricky question; Brussels not letting the state entities salvage their own investment might be seen as discriminatory.But if the greater good of German lending is the motivation, namely pruning an over-banked sector, you have to ask whether it makes sense to keep NordLB afloat at all costs. Berlin has taken a dim view when Italy has done similar with its lenders. A Helaba merger with Deka would be little consolation.To contact the author of this story: Elisa Martinuzzi at firstname.lastname@example.orgTo contact the editor responsible for this story: James Boxell at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Elisa Martinuzzi is a Bloomberg Opinion columnist covering finance. She is a former managing editor for European finance at Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Deutsche Bank's Paul Achleitner was the best paid chairman of a German blue-chip company last year, according to a study published Tuesday. Achleitner earned almost 860,000 euros ($944,624.00), surpassing that paid to the chairmen of BMW and Fresenius by more than 200,000 euros, according to shareholder lobby group DSW. Achleitner, whose salary was 7.3% higher than a year earlier, ousted Deutsche's chief executive in 2018, and the bank reported its first annual profit in four years.
(Bloomberg) -- European stocks sank, snapping two days of gains, amid renewed trade tensions between China and the U.S. and as Brexit talks faced yet another impasse.The Stoxx Europe 600 Index was down 0.9% as of 12:51 p.m. in London, with all industry groups lower. China indicated it would strike back after the U.S. blacklisted eight of its tech giants, while Bloomberg reported that the Trump administration is moving ahead with discussions about possible restrictions on capital flows into China, with a particular focus on investments made by U.S. government pension funds.“There’s a clear escalation between the U.S. and China today, which doesn’t bode well for a deal later this week,” said Alexandre Baradez, chief market analyst at IG France. “A big chunk of the gains in European stocks this year has been on hopes of a trade deal, so clearly the risk is on the downside at this point.”The drop in European stocks was broad based, with travel and leisure shares among the worst hit after EasyJet Plc postponed an update on its outlook for next year. Banks also tumbled, with both Deutsche Bank and Commerzbank down 3.8%.In the U.K., Prime Minister Boris Johnson told German Chancellor Angela Merkel a Brexit deal is essentially impossible if the EU demands Northern Ireland should stay in the bloc’s customs union, sending the pound lower. The FTSE 100, which tends to have a negative correlation to the currency, fell 0.2%, while the more domestic-focused FTSE 250 index lost 0.9%.Last week, European equities had their worst drop in two months as concerns about global growth sent investors running for the exit.Among the biggest movers, Qiagen NV tumbled 20% after reporting disappointing earnings and as its chief, Peer Schatz, decided to step down. Uniper SE dropped 7.5% after Fortum Oyj agreed to acquire a majority stake in the company.To contact the reporters on this story: Ksenia Galouchko in London at firstname.lastname@example.org;Namitha Jagadeesh in London at email@example.comTo contact the editors responsible for this story: Blaise Robinson at firstname.lastname@example.org, John ViljoenFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Deutsche Bank AG intends to make about half its planned 18,000 job cuts in Germany as it relies on savings at the retail units to lower costs, according to people familiar with the matter.The lender employed about 41,700 people in its home market at the end of last year, out of a total of 91,700. Outside Germany, London will also be hit especially hard, partly because of Brexit, while the U.S. may see a lower share of front-office cuts once the bank has exited its equities trading business, the people said, asking not to be identified because talks are ongoing.Chief Executive Officer Christian Sewing in early July unveiled Deutsche Bank’s most radical restructuring in recent history, with job reductions a key piece of the plan. The scale of the planned reductions in Germany may surprise analysts after the CEO had previously indicated that the country would see its “fair” share of cuts. It also comes as an economic slowdown takes hold of Europe’s largest economy and the risk of a recession increases.While Deutsche Bank has yet to detail the cuts to its retail bank -- now its largest division by revenue -- it’s increasingly clear they will be big, too. Frank Strauss, the head of the business, left when the restructuring was announced in the summer because he didn’t support the plans.“We do not communicate details of the planned job cuts on a regional or divisional level,” the bank said by email. “We are communicating directly with our works council and our employees regarding their jobs and options available to them.”The new head of the German retail unit, Manfred Knof, is currently scouring the business for cost savings. He’s considering turning the unit’s second headquarters in Bonn into an outpost, and he may dissolve the retail unit’s separate legal structure, people familiar with the matter have said. That could save Deutsche Bank hundreds of millions of euros in compensation and regulatory expense, other people said.Retail CutsA decision will happen before the bank’s investor day in December, the people said. The change would need approval from financial regulators, who have so far indicated they take a positive view, one person said. They may not give their final verdict before next year, the person said.Deutsche Bank is just one of many large lenders that have recently announced staff reductions, though its effort is the biggest by far. HSBC Holdings Plc is seeking to shed as many as 10,000 roles, largely by selling its retail operations in France, a person familiar with the matter said on Monday. Taken together, European lenders have officially announced plans for more than 50,000 job cuts year to date, according to data compiled by Bloomberg.Past headcount reductions at Deutsche Bank have frequently included selling entire units, as the bank did with its retail operations in Poland and Portugal. But the latest plan doesn’t take into account any unannounced sales, a person familiar with the matter said.CEO Sewing had previously said that most of Deutsche Bank’s planned cuts will happen by the end of 2021. While they will affect all regions where the bank operates, Germany will see “a fair share and a good share,” he said. The measures may take longer there than in other countries because of labor laws.Deutsche Bank shares fell 3% as of 12:16 p.m. in Frankfurt and have declined almost 10% so far this year.The German job cut figure includes staff being made redundant through the merger of Postbank with Deutsche Bank’s retail business, which was announced in 2017. In July, Sewing replaced Strauss with management board member Karl von Rohr. Strauss, who used to run the Postbank subsidiary when Deutsche Bank was still planning to list it on a stock exchange, was reluctant to cut costs as quickly as Sewing thought necessary, people familiar with the matter said. Strauss couldn’t be immediately reached for comment.Retail SavingsDeutsche Bank has said the retail bank will contribute 60% of the 2.3 billion euros in cost savings it’s seeking to wring from its core businesses by the end of 2022. The division’s expenses are expected to fall by an average of 6% per year -- far more than at any of the other divisions.Deutsche Bank has indicated that most cuts will affect support roles and back office staff, rather than client-facing employees, as it seeks to automate workflows. It doesn’t break down where those jobs are located, but it has large back-office hubs in Germany as well as in places as far apart as Florida, the Philippines and India.The decision to pull out of equities trading will also contribute toward the job reduction goal. Deutsche Bank recently sealed an agreement with BNP Paribas SA to transfer the part of the business that serves hedge funds, including about 1,000 staff who will move to the French bank, people familiar with the matter have said.(Adds details about cuts at other banks in seventh paragraph.)To contact the reporter on this story: Steven Arons in Frankfurt at email@example.comTo contact the editors responsible for this story: Dale Crofts at firstname.lastname@example.org, Keith CampbellFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Deutsche Bank is creating a new technology division in a strategy shift designed to reduce complexity and lower costs while transforming systems that have held back the bank for years. Technology has long been a problem for Deutsche Bank. Former Chief Executive John Cryan complained in 2015 about "lousy systems" and "very slow processes", and former operations chief Kim Hammonds last year described Deutsche as "vastly complex" and the "most dysfunctional" workplace she has known.
(Bloomberg) -- Explore what’s moving the global economy in the new season of the Stephanomics podcast. Subscribe via Pocket Cast or iTunes.U.S. hiring missed projections in September and wage gains cooled, offering a warning that the record-long expansion is poised for further slowing even as the jobless rate fell to a half-century low.Private payrolls expanded by 114,000 after an upwardly revised 122,000 advance the prior month, according to a Labor Department report Friday that missed the median estimate of economists for a 130,000 gain. Total nonfarm payrolls climbed a below-forecast 136,000, which was boosted by 1,000 temporary government workers to prepare for the 2020 Census count.Average hourly earnings rose 2.9% from a year earlier, the weakest in more than a year and missing estimates. The jobless rate unexpectedly dropped to 3.5%, the lowest since December 1969, from 3.7%.Even with the shaky jobs and wage figures, traders of fed funds futures slightly reduced the amount of easing they expect from the U.S. central bank this year and marginally trimmed their expectations for an October cut amid a lower-than-expected unemployment rate. U.S. stocks rose and two-year Treasuries fell, while the dollar remained lower.“Overall it is a bit of a mixed bag,” Torsten Slok, Deutsche Bank Securities chief economist, said on Bloomberg Television. But the main payrolls number along with weakness in manufacturing add to signs that the trade war is putting “downward pressure both on hiring and the economy.”More broadly, the downbeat reading adds to signs President Donald Trump’s trade policy and weakness abroad pose an increasing threat to growth in the world’s largest economy. At the same time, the unemployment rate decline gave him a chance to boast, which he promptly did on Twitter minutes after the report, and was soon echoed by his economic adviser.“There’s a lot of good data out there, and there’s some soft data,” Larry Kudlow, the head of the National Economic Council, said in a Bloomberg Television interview. “The headline number here is the 3.5% unemployment rate,” he said, citing gains by African Americans, Hispanics, and those without high school degrees.The jobs report caps a week of U.S. economic data that whipsawed stocks and sent already-low Treasury yields tumbling, led by a key manufacturing gauge that sank deeper into contraction with the worst reading in a decade. A slowdown also threatens Trump’s re-election prospects next year, with the president frequentlystaking his message on a strong economy.Read more: Dodge a Major Global Slowdown? A Lot Needs to Go RightThe data offer a contrast with characterizations by Fed Chairman Jerome Powell and his colleagues at recent meetings that job gains have been “solid,” though they may still have room to stick with that assessment. Late Thursday, Fed Vice Chairman Richard Clarida said the economy remains on solid footing and recession risks aren’t “particularly elevated under appropriate monetary policy.”Powell is scheduled to deliver opening remarks at 2 p.m. in Washington at a Fed event, followed by comments from governors Lael Brainard and Randal Quarles.What Bloomberg’s Economists Say“The September jobs report fell shy of consensus expectations, but did not signal that manufacturing-sector woes were dragging down the broader economy. While factory hiring posted a modest contraction, goods-sector employment continued to rise. Similarly, service-industry subcategories vulnerable to factory conditions, such as trade/transportation and business services, also posted net hiring gains.”--Carl Riccadonna, Yelena Shulyatyeva and Andrew HusbyClick here to read full noteRevisions were a bright spot, adding 45,000 jobs for the prior two months, though the three-month average still fell to 157,000 from 171,000.The job gains were concentrated in health care and professional and business services. Retail employment contracted for an eighth-straight month, while construction payroll growth remained tepid.Manufacturers subtracted 2,000 jobs, continuing a trend toward weaker growth. It likely reflects the slowdown at factories, seen also in data from the Institute for Supply Management, which points to slower production and orders amid weakening demand for goods.Factory employment may be poised to fall further in coming months with General Motors Co. workers on strike. About 46,000 employees walked out Sept. 15, which was too late in the month to be captured in the Labor Department’s survey though may affect readings for October. At the same time, the strike may already be impacting wages and hours worked.Average hourly earnings were little changed from the prior month, missing estimates for a gain, while the 2.9% annual wage gain fell below all estimates in Bloomberg’s survey of economists. Pay for production and nonsupervisory workers held up, though, with a gain of 3.5%, down only slightly from a decade-high of 3.6%.The U-6, or underemployment rate, slipped to 6.9%, the lowest since 2000, from 7.2%. Some analysts see this as a more accurate reflection of the labor market as it includes part-time workers who’d prefer a full-time position and those who aren’t actively looking.Economists surveyed by Bloomberg had projected 145,000 new jobs with the unemployment rate remaining at 3.7% and average hourly earnings rising an unchanged 3.2%.\--With assistance from Kristy Scheuble, Sophie Caronello, Vince Golle, William Edwards and Benjamin Purvis.To contact the reporter on this story: Katia Dmitrieva in Washington at email@example.comTo contact the editors responsible for this story: Scott Lanman at firstname.lastname@example.org, Jeff KearnsFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Alphabet Inc.’s cloud business alone is now worth $225 billion, Deutsche Bank analysts led by Lloyd Walmsley wrote in a note.The unit could report compound annual growth of 55% between 2018 and 2022, and reach annual sales of about $38 billion by 2025, the analysts wrote.“While Google Cloud has been lagging behind in the market and burning money historically, with increased confidence in the go-to-market and commercial traction under Mr. Kurian, we think it can grow market share,” they wrote. Former Oracle Corp. executive Thomas Kurian was named head of the division in November.The value ascribed by Deutsche Bank to Google Cloud is nearly twice the market value of IBM, which reported cloud revenue of $19.2 billion in 2018, at the close of trading on Wednesday, Bloomberg data show.Deutsche Bank, which has a buy rating on Alphabet, raised its price target on the company to $1,600 a share, higher than any of the 45 analysts surveyed by Bloomberg. Alphabet shares were up 0.2% to $1,180 a share in pre-market trading.(Corrects to remove comparison to IBM in headline and first paragraphs.)\--With assistance from James Cone.To contact the reporter on this story: Joe Easton in London at email@example.comTo contact the editors responsible for this story: Beth Mellor at firstname.lastname@example.org, Jon Menon, Celeste PerriFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Having revolutionized the business of buying stocks, Vanguard Group is now coming for currencies.The investing pioneer obsessed with lowering costs is testing a new way for asset managers to trade currencies and avoid big investment banks, according to a person familiar with the matter. The platform, based on the blockchain technology that powers Bitcoin, has been operational for two months and has handled some trades, said the person, asking not to be named because the project is private.If successful, the venture could shift power in the $6 trillion a day currency market that banks such as JPMorgan Chase & Co. and Deutsche Bank AG have ruled for decades. While skeptics say it will be challenging to get enough investment firms on board, the cost savings of peer-to-peer trading could prove appealing in a world where profits are being squeezed by a race to the bottom on fees and mounting regulatory burdens.“Direct trading really is the Holy Grail for the buy-side,” said Campbell Adams, a former senior currency trader at Deutsche Bank who founded a platform called ParFX in partnership with banks including Citigroup Inc. and JPMorgan. “In theory, it sounds great because you can reduce your costs if you can match directly with someone else who has a countervailing interest,” he said. Yet “it will require a critical mass of users.”Breaking From BanksVanguard, with more than $5 trillion in total assets, trades about $2.5 trillion of currencies a year, Andy Maack, its global head of FX trading, told an industry publication this year. There’s a “tremendous amount of interest in the potential for disintermediation,” he said in an interview last month with The Trade, describing a system that would be “decoupled from banks” and price discovery would move to outside platforms able to match peers.“Vanguard is currently piloting a project focused on improving the efficiency and reducing risk of FX hedging,” company spokeswoman Carolyn Wegemann said, declining to elaborate. It’s part of the firm’s commitment to “lower the cost of investing for all investors,” she said.Bloomberg LP, the parent company of Bloomberg News, operates an FX trading platform for banks.The project would be among the most significant applications of blockchain in finance. While nearly all major banks and money managers are experimenting with the technology to do everything from issuing bonds to processing payments -- JPMorgan has developed its own digital token and Banco Santander SA has issued tokenized debt -- few have used it in large-scale commercial operations.The project’s success would also mark a leap in the evolution of the FX market, which has been inching toward a peer-to-peer model over at least two decades, said Adams, who has more than 30 years experience trading currencies and now runs Pure Digital, a venue for cryptocurrencies.When Adams worked on the FX trading desks of Citigroup, Morgan Stanley and Deutsche Bank in the 1990s, asset managers made currency trades almost exclusively through banks. In the mid-2000s, buy-side firms could match trades with other investors on electronic trading platforms but still had to go through a bank to execute them, said Adams. Vanguard’s initiative would bypass that, too.Success isn’t guaranteed. It remains to be seen how the venture will operate, whether there’ll be sufficient liquidity, who will be allowed to participate and who will be willing to sign up, Adams said.Swaps, ForwardsA blockchain-based peer-to-peer platform would have greatest impact on swaps and forward markets rather than in spot trading because on a day-to-day basis opposite interests among investment firms may be limited in spot, said Adams. Banks are also more dominant in these derivatives trades because investors may rely on them for credit lines, said Jay Moore, the founder of FX HedgePool, a currency platform that matches buy-side customers.Vanguard, based in Valley Forge, Pennsylvania, is no stranger to challenging convention. Founded in 1975, the investor-owned firm made its name with the first index mutual fund. It later was among the biggest proponents of ditching a long-held market practice that let currency dealers back out of losing trades.“Vanguard has proven to be pioneering and very forward thinking in many ways, so it makes sense for them to take the lead,” said Moore, who’s based in New York and previously worked for Brown Brothers Harriman. “The market won’t change on its own, it takes someone to push the envelope.”The Vanguard FX platform uses blockchain technology developed by Symbiont, a New York-based company that’s applying the technology behind Bitcoin to capital markets, said the person familiar with the matter.This also isn’t the first time Vanguard has partnered with Symbiont: The firms previously teamed up to explore applying blockchain to the investment giant’s process for updating the index data behind its mutual funds. A spokeswoman for Symbiont, which is backed by Citigroup and Nasdaq Inc., declined to comment.To contact the reporter on this story: Alastair Marsh in London at email@example.comTo contact the editors responsible for this story: James Hertling at firstname.lastname@example.org, David ScheerFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.