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  1. #1
    Senior Member Airbornesapper07's Avatar
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    "The Mood Is Pretty Hopeless": Scenes Outside Deutsche Bank Offices Evokes Lehman Col

    "The Mood Is Pretty Hopeless": Scenes Outside Deutsche Bank Offices Evokes Lehman Collapse




    This impression was not lost on investors.

    Tue, 07/09/2019 - 06:18
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    At the end of the day, all of the frenzied whispers in the press about Deutsche Bank CEO Christian Sewing's sweeping restructuring hardly did it justice. Instead of moving slowly, the bank started herding hundreds of employees into meetings with HR, first in its offices in Asia (Hong Kong, Sydney), then London (which got hit particularly hard) then New York City.

    By some accounts, it was the largest mass banker firing since the collapse of Lehman, which left nearly 30,000 employees in New York City jobless. Although the American economy is doing comparatively well relative to Europe, across the world, DB employees might struggle to find work again in their same field.
    According to Bloomberg, automation and cuts have left most investment banks much leaner than they were before the crisis, and the contracting hedge fund industry, which once poached employees from DB's equities business, isn't much help. Some employees will inevitably find their way to Evercore, Blackstone - boutique investment banks and private equity are two of the industry's top growth areas - or family offices, which, thanks to the never-ending rally in asset prices (and the return of bitcoin), are also booming.
    Oh, and of course, there's always crypto. Some evidence has surfaced to suggest that many young bankers are already looking to make the leap.




    For the highest-paid employees being let go this week, many will need to get used to lower pay. Some 1,100 'material risk takers' have been let go. On average, they earned $1.25 million, with almost 60% of that in cash.
    "A lot of these people are going to have to get used to less compensation," said Richard Lipstein, managing director at recruiting firm Gilbert Tweed International, in a telephone interview. And "the percentage of compensation in cash is lower than it used to be."
    Many will need to leave the street, and possibly whatever city in which they are currently living, to find work elsewhere.
    "A lot of the people coming out of DB are going to be very challenged to find jobs just because of the sheer change in the equity business," said Michael Nelson, a senior recruiter at Quest Group. "When you are dispersing that many people globally, some of those people might have to leave the business."
    But although banking headcount has never returned to its pre-crisis levels...


    ...at least one major Wall Street institution is looking to hire some Deutsche people: Goldman Sachs.While BBG's piece on the layoffs focused on the difficulty these employees may face in finding new work, Reuters described the scene outside these offices, where one insider had warned about "Lehman-style" scenes. To wit, some just fired workers could be seen mulling outside, taking photos with colleagues and splitting cabs, presumably to go to the nearest pub and quaff liquor, beer and prosecco.
    Staff leaving in Hong Kong were holding envelopes with the bank’s logo. Three employees took a picture of themselves beside a Deutsche Bank sign outside, hugged and then hailed a taxi.
    "They give you this packet and you are out of the building," said one equities trader.
    "The equities market is not that great so I may not find a similar job, but I have to deal with it," said another.
    After weeks of looming dread, employees were called into auditoriums, cafeterias and offices, handed an envelope with the details of their redundancy package, and shown the door. Reuters' reporters followed some of the employees at DB's London office to the nearest pub.
    Few staff wanted to speak outside the bank’s London office, but trade was picking up at the nearby Balls Brothers pub around lunchtime.
    "I got laid off, where else would I go," said a man who had just lost his job in equity sales.
    Job cuts were expansive in the bank's main support centers, where the mood was "pretty hopeless".
    A Deutsche Bank employee in Bengaluru told Reuters that he and several colleagues were told first thing that their jobs were going.
    "We were informed that our jobs have become redundant and handed over our letters and given approximately a month’s salary," he said.
    "The mood is pretty hopeless right now, especially (among)people who are single-earners or have big financial burdens such as loans to pay," he added.
    Sewing's grand restructuring plan involves shutting down Deutsche's entire lossmaking global equities business, cutting 18,000 jobs (roughly one-fifth of the bank's total headcount) and hiving off €288 billion ($322 billion) of loss-making assets into a bad bank for sale or run-off. The goal of the restructuring is to reorient DB away from its troubled institutional business and more toward commercial banking and asset management.

    As a JP Morgan analyst pointed out, questions linger over DB's ability to grow, its "ability to operate a corporate franchise without a European equity business."Investors were also taken by surprise, which is probably why DB shares sold off again on Tuesday. Closing the bank's European equity business as a radical step that few anticipated. Most of the leaks to the media seemed to suggest that the cuts would focus on its foreign business, particularly the troubled US equities unit.But without an equities business, some clients might lose faith in DB's ability to win business from large corporations. Then again, there's also the sheer enormity of what the bank is trying to do: substantially grow revenues while cutting a huge chunk of its staff and closing whole businesses, some of which are synergistic with other businesses that will remain open.As Daniele Brupbacher of UBS pointed out, the odds of success seem low: "Cutting costs by one-quarter while increasing revenues by 10 per cent over four years in the current market environment, while undergoing massive restructuring, could be seen as 'challenging.'"Restructuring costs are also probably weighing on shareholders' minds: the restructuring is expected to produce a full-year loss. Will corporate bank head Stefan Hoops succeed in doubling the Global Transaction Bank’s pretax earnings to €2 billion over the next 2 years, and make a tangible return on equity of 15% by 2022? We guess it's possible. We suppose it's possible, but is it likely...


    https://www.zerohedge.com/news/2019-07-09/scene-outside-deutsche-bank-offices-evokes-lehman-collapse
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  2. #2
    Senior Member Airbornesapper07's Avatar
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    this could take it all down; I would suggest getting at least several weeks of food in the pantry; last I seen they had about 63 Trillion in Derivatives

    Bank Run: Deutsche Bank Clients Are Pulling $1 Billion A Day



    The similarities to Lehman are growing by the day.
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  3. #3
    Senior Member Airbornesapper07's Avatar
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    A Bank With 49 Trillion Dollars In Exposure To Derivatives Is Melting Down Right In Front Of Our Eyes
    Could it be possible that we are on the verge of the next “Lehman Brothers moment”? Deutsche Bank is the most important bank in all of Europe, it has 49 trillion dollars in exposure to derivatives, and most of the largest “too big to fail banks” in the United States have very deep financial connections to the bank. In other words, the global financial system simply cannot afford for Deutsche Bank to fail, and right now it is literally melting down right in front of our eyes.
    For years I have been warning that this day would come, and even though it has been hit by scandal after scandal, somehow Deutsche Bank was able to survive until now. But after what we have witnessed in recent days, many now believe that the end is near for Deutsche Bank. On July 7th, they really shook up investors all over the globe when they laid off 18,000 employees and announced that they would be completely exiting their global equities trading business…
    It takes a lot to rattle Wall Street.
    But Deutsche Bank managed to. The beleaguered German giant announced on July 7 that it is laying off 18,000 employees—roughly one-fifth of its global workforce—and pursuing a vast restructuring plan that most notably includes shutting down its global equities trading business.
    Though Deutsche’s Bloody Sunday seemed to come out of the blue, it’s actually the culmination of a years-long—some would say decades-long—descent into unprofitability and scandal for the bank, which in the early 1990s set out to make itself into a universal banking powerhouse to rival the behemoths of Wall Street.
    These moves may delay Deutsche Bank’s inexorable march into oblivion, but not by much.
    And as Deutsche Bank collapses, it could take a whole lot of others down with it at the same time. According to Wall Street On Parade, the bank had 49 trillion dollars in exposure to derivatives as of the end of last year…
    During 2018, the serially troubled Deutsche Bank – which still has a vast derivatives footprint in the U.S. as counterparty to some of the largest banks on Wall Street – trimmed its exposure to derivatives from a notional €48.266 trillion to a notional €43.459 trillion (49 trillion U.S. dollars) according to its 2018 annual report. A derivatives book of $49 trillion notional puts Deutsche Bank in the same league as the bank holding companies of U.S. juggernauts JPMorgan Chase, Citigroup and Goldman Sachs, which logged in at $48 trillion, $47 trillion and $42 trillion, respectively, at the end of December 2018 according to the Office of the Comptroller of the Currency (OCC). (See Table 2 in the Appendix at this link.)
    Yes, the actual credit risk to Deutsche Bank is much, much lower than the notional value of its derivatives contracts, but we are still talking about an obscene amount of exposure.
    https://www.activistpost.com/…/a-bank-with-49-trillion-doll…
    .



    activistpost.com

    A Bank With 49 Trillion Dollars In Exposure To Derivatives Is Melting Down Right In Front Of Our Eyes
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