As rumours of possible German state intervention persist, Deutsche Bank is struggling to meet its capital and earnings targets according to figures from S&P Global Market Intelligence.
Prompted by the US Department of Justice demanding US$14bn to settle legal action over mortgage securities, market concern over Deutsche Bank’s capital and earnings has spilled over into rumours about a state-led rescue. The bank and the German government have issued several rounds of denials, the latest after German daily Die Zeit claimed on 28 September that work was underway on a rescue plan that potentially includes fresh capital for the bank.
Despite the denials, S&P says that Deutsche Bank is struggling and the bank’s results for the past several years show weakening equity, high leverage and a poor earnings record, while the gap between recent performance and the actual targets looks considerable.
S&P also notes that consensus estimates for the full year 2017 suggest that Deutsche Bank’s common equity Tier 1 ratio will come close to its 2018 target thanks in part to a reduction in risk-weighted assets, but they foresee weak returns around 4% – and downgrades cannot be ruled out. The bank’s shares have more than halved in value so far this year, and its market capitalisation has fallen below €15bn.
Deutsche Bank plans to partner with fintechs that have complementary business models, rather than buying out tech start-ups and competing in the market, bank executives said at press briefing this week. They also discussed future strategies for the technology, securities and payments spaces.
Leaked documents from the UK Home Office proposing that low-skilled EU migrants would be restricted in the UK’s post-Brexit immigration scheme may be more likely to increase automation and off-shoring of labour, rather than increase British wages, industry experts have warned.
The European Central Bank's (ECB) hotly anticipated meeting on Thursday afternoon made the euro skyrocket, as president Mario Draghi announced interest rates would remain at 0% and its quantitative easing programme will stay until at least the end of 2017.
The “sad truth” of banking is that many jobs will be automated in the future, Deutsche Bank's chief executive said yesterday. Despite this, a recent survey found that 98% of European workers are optimistic about the changes automation will bring to their workplace.