Have you ever wondered which big bank after Lehman Brothers would be next to fall? This is why you see so much shuffling from within and people resigning suddenly and going to work for another institution.
Moreover, with over $72 TRILLION — yes trillion, in derivatives exposure — we have likely found it. To put this tiny bit of risk in perspective, the GDP of Germany itself is a mere humble $2.7 trillion.
This is why Germany is also worried in this high stakes game of chicken. If Greece goes, Deutsche Bank who’s heavily invested will go, and creates the possibility of bringing the country with it. From there you can only see how such a scenario would spread to the rest of the world.
Earlier this month, Deutsche Bank’s co-CEOs Anshu Jain and Jürgen Fitschen were shown the door (well, technically they resigned, but with shareholder support plummeting amid skepticism about both financial targets and ongoing legal problems, it’s easy to read between the lines). The bank, which has paid out more than $9 billion over the past three years alone to settle legacy litigation, has become something of a poster child for corrupt corporate culture. Consider the following rundown of the legal problems the bank faced as of the beginning of its 2015 fiscal year:We are currently the subject of regulatory and criminal industry-wide investigations relating to interbank offered rates, as well as civil actions. Due to a number of uncertainties, including those related to the high profile of the matters and other banks’ settlement negotiations, the eventual outcome of these matters is unpredictable, and may materially and adversely affect our results of operations, financial condition and reputation.
In April, Deutsche settled rate rigging charges with the DoJ for $2.5 billion (or about $25,474 per employee) and subsequently paid $55 million to the SEC (an agency that’s been run by former Deutsche Bank employees and their close associates for years) in connection with allegations it deliberately mismarked its crisis-era LSS book to the tune of at least $5 billion.
But it was out of the frying pan and into the fire so to speak, because early last month, the DoJ announced it would seek to extract a fresh round of MBS-related settlements from banks that knowingly packaged and sold shoddy CDOs in the lead up to the crisis. JP Morgan, Bank of America, and Citi settled MBS probes when the DoJ was operating under the incomparable (and we mean that in a derisive way) Eric Holder but now, emboldened by her pyrrhic victory over Wall Street’s FX manipulators, new Attorney General Loretta Lynch is set to go after Barclays PLC, Credit Suisse Group AG, Deutsche Bank AG, HSBC Holdings PLC, Royal Bank of Scotland Group PLC,UBS AG and Wells Fargo & Co.
With the bank facing yet another settlement that could run into the billions and with both CEOs on the way out, the exodus continues as Bloomberg reports that Jonathan Pollack, the bank’s global head commercial real estate, is leaving after 16 years. Here’s more:Pollack departed on Friday, according to a company memo. Amanda Williams, a Deutsche Bank spokeswoman, confirmed the contents of the memo and declined to comment further. Pollack who was based in New York, didn’t immediately return telephone calls seeking comment.
Pollack took the helm of Deutsche Bank’s commercial mortgage bond business in 2011 and helped make it Wall Street’s top underwriter of securities linked to real estate from strip malls to skyscrapers. The bank’s ascent coincided with the rebirth of the roughly $550 billion market for packaging real estate debt into bonds and selling it to investors. Sales of such securities had frozen for more than a year in the wake of the financial crisis.
Full article: Deutsche Bank Exodus Continues As Real Estate Chief Leaves For Blackstone (Zero Hedge)