Receiving Wide Coverage ...
Deutsche's turn in the hot seat: Deutsche Bank replaced Wells Fargo as the financial world's favorite whipping boy, at least over the weekend. The Financial Times reports that Germany's deputy chancellor and economics minister, Sigmar Gabriel, "launched a blistering attack" on Deutsche's CEO John Cryan after Cryan last week blamed "forces in the market" for trying to destabilize the bank. "I didn't know whether I should laugh or be furious that a bank which turned speculation into a business model now declares itself the victim of speculators," Gabriel told reporters. Gabriel's comments "suggest that if push comes to shove, the bank can expect little sympathy from Berlin," the FT says.
In a separate commentary in the FT, David Marsh says most of the recent troubles at the German banking giant are its own fault, a "chronicle of melancholia and pain reminiscent of a fable by the Brothers Grimm." "This most enduring of institutions has been laid low by internal mismanagement and wrenching European change after Germany's 1990 reunification," he writes. "Throwing off its traditional conservatism, Deutsche Bank has moved into a realm of risk-taking where recklessness has ridden roughshod over rectitude."
Indeed, according to the New York Times, Deutsche Bank "has made its name not as a home for German savers but as a place for hedge funds and other risk-loving investors to put on some of their boldest financial bets."
But Simon Nixon, the Wall Street Journal's chief European commentator, says not all of Deutsche's troubles can be laid at its door. Regulation and globalization are also to blame. "Investors doubt whether the bank can ever earn an economic return on its equity, particularly when the amount of equity it is required to hold is proving a moving target as regulatory demands rise ever higher," Nixon writes. "In recent years, Deutsche's returns have been crushed by a combination of tougher regulation, higher capital requirements, negative interest rates, flatter yield curves, less corporate activity, lower asset-management fees and lower trading income. These aren't symptoms of European malaise but a wider crisis of globalization, which has hit international banks particularly hard."
Last Friday's report from Agence France-Presse that Deutsche and the U.S. Justice Department were close to a $5.4 billion settlement buoyed the bank's stock price as well as the overall market. But the Wall Street Journal reports that while the talks are "moving forward," no deal has been reached. The paper said DOJ lawyers "have floated the possibility of also reaching accords with other European banks who have yet to resolve similar investigations and announce them at once, but no such move is certain."
Now, back to Wells: But the financial press isn't done commentating on the Wells Fargo phony accounts scandal. Writing in the Financial Times, Yuri Bender, editor-in-chief of Professional Wealth Management, says the bank's woes are symptomatic of the U.S. banking industry as a whole, whose better days are in the rearview mirror. Wells' recent trouble "has further dulled the glamour of a once vibrant US financial sector," he writes. Quoting Lori Heinel, deputy global chief investment officer at State Street Bank, "The days of total US dominance in global commerce are on the wane. It is unlikely that the US will ever regain behemoth status and must reluctantly learn to live in a new era of slow-and-low growth."
Clawbacks not the answer: "If the goal is to keep corporate executives honest, compensation clawbacks aren't doing the job. That's what the recent action by Wells Fargo's board shows," writes Gretchen Morgenson, the New York Times financial columnist. "Yes, the bank's directors acted on Tuesday to recover $60 million in stock grants from two top executives in the wake of the phony-account-opening scandal. But the move came almost three years after the improprieties came to light — and should serve as Exhibit A for the shortcomings in these pay recovery programs."
Where's fintech?: Investment banks are lagging far behind payments and lendingfirms in using financial technology to make their operations more efficient. Citing a research report from the Boston Consulting Group, the FT reports that start-ups concentrating on capital markets activities attracted just 4% of the $96 billion invested in fintech since 2000, with the "vast majority of the funding" going to other business lines.
The future is getting closer: The Washington Post tells its readers that "real-time money transferring services are finally becoming a reality. The good news is that a slew of upgrades and new services being rolled out now and over the next couple of months are speeding up how quickly we can move money digitally," the paper says. "Right now we're at the very beginning of sea changes for payments for consumers and for businesses," the paper quotes Jane Larimer, executive vice president of Nacha.