The bad reawakening from the top of the world.
In this new article we are going to speak about DBK problems and the ways it may resolve them.
Main issues are:
- surge of the legal costs,
- lower debt trading revenue,
- Q4 pretax loss (1.15 billion €),
- market manipulation,
- future of Deutsche Bank and of the European Banking System.
[spoiler title=”The surge of legal costs.”]
The surge of legal costs – Bloomberg insight.
“180 regulatory proceedings. About 1,000 lawsuits, each involving claims of more than 100,000 euros ($136,580) against the company at the end of the first quarter”
Mr. George Clooney would say: “What else?!“, investors are pretty nervous and have just changed idea on the great Germany, one of the most powerful state in Europe in the real economy side. By the way, the financial side of the Moon is giving some troubles because we all know (and ECB, too) the condition of the Sparkasse, the regional institutes in Germany, and one of the biggest investment banks of the nation is one of the most exposed to derivatives, this is not very fair in front of the new-(old) financial system’s drivers.
26th of July, I’m tryng to finish writing this article, but new arrow hit the share, “When does the nightmare finish?”
[spoiler title=”Trading Revenue Drop.”]
Trading Revenue Drop – Bloomberg insight.
-39% expected profit falling in Q1 2014 due to trading revenue drop.
This business made 1.65 billion euros in Q1 2013, and 1.01 billions € in Q1 2014.
The main cause are stricter regulatory requirements for capital levels, these one have riduced the “economic freedom” so financial institutions have to follow Basel III’ parameters and wisely choose their assets and assign them to the most appropriate function (but read this to get more informed).
It’s important to underline the impact of the political crisis in the raw materials quotes and on the general yields level.[/spoiler]
[spoiler title=”The surpring loss in Q4 2013.”]
The surpring loss in Q4 2013 – Read the annual Report.
1.2 billion €:
- 1 billion € to cover legal proceedings and investigations
- losses in recognition of the diminished value of acquisitions
- heavy costs for litigation, restructuring and balance sheet reduction (Deutsche Bank paid a total of €2.5bn in litigation expenses in 2013. In December, it was fined a record €725m by EU antitrust regulators over interest-rate manipulation. – the telegraph)
[spoiler title=”The market manipulation.”]
The market manipulation – Read the annual Report.
What if mortgage rates would be manipulated?
Let’s go deeper, what if the Libor would be manipulated?
What if choosing for a fixed rate or variable rate would be a bad game for informed people, too?!
What if gold and silver quotes would be manipulated?
Just say us the pre-setting, and we can invest. But not. We don’t know the true, we study, we invest wisely, then it arrives a group of banks and they decide what is good for you, they make the market.
Well this is not a fair game, and the Authorities sometimes punish them.
So I just hope for the CEOs of these financial institutions that this game gave them a gain, because if they (or their employees) are not good to execute criminal aims without be catched it might be better for everyone an healthy managing of the banks.[/spoiler]
[spoiler title=”The future of DBK and of the E.B.S..”]
The future of DBK and of the E.B.S.
Deutsche bank needs a huge recapitalization. Until now the general management is tryng to say that “is a good way increasing capital when there are good winds in the markets”, but DBK need a 5-10 billions € capital increase and this is quite harder to say clearly.
The UE is tryng to help the banks to help the states but the only thing it can do is fixing rules and sanctions more daunting on the general assumption of risks and on the fair function of the market.
It’s quite unuseful the so-called Mifid when markets are continuously manipulated. [/spoiler]
Who is BES? This is quite an easy question to answer: it’s the 2nd largest private financial institution in Portugal and the 9th company in PSI, ordered for capitalization.
Ok. Someone can explain this?
Take a look at the volumes below the chart (…)
- 9th of July, Downgrade by Moody’s to Caa2 from B2;
- 10th of July, the market doubts about capacity of Bes to contain the missed payments;
- 18th of July, Portugal’s Central Bank tests Santander interest in investing in Bes;
- 19th of July, Bes aks for help (is it too late?);
- 22th of July, Central Bank asks to Bes for a urgent and anticipated appointment of new CEO and CFO.
Firsts Consequences on financial markets:
- Bund rates fall again to record low-Yield
- Bond rates jumps
- Reputational Damage
- Consequences on Portugal (we don’t want new bailouts, I don’t think we will have a new Bankia treatment.