Deutsche Bank’s Brutal Overhaul is Sign that Global Financial System is in Trouble – Jim Rogers

A statue next to the logo of Germany's Deutsche Bank in Frankfurt © Reuters / Kai Pfaffenbach

When traditionally stable institutions like Deutsche Bank find themselves in trouble, it’s a signal that the world’s financial system will face big problems down the road, legendary investor Jim Rogers has told RT.

On Monday, the German multinational investment bank –and the world’s 15th largest bank by total assets– started cutting thousands of jobs as part of an $8.3 billion overhaul announced one day earlier. The bank’s workforce is set to be reduced by 18,000 to around 74,000 employees by 2022, as Deutsche Bank scraps its global equities and trading operations.

The move has already impacted the bank’s shares, which started to fall after initial 4 percent gains on Monday.

“The financial system is in trouble and this is just one sign of what is going on. This has happened in previous financial problems in the 1930s or the 1960s or the 1990s,” Rogers said in a phone interview with RT. He explained that central banks around the globe drove interest rates “to crazy levels,” and now we have to pay the price for that.

This led to what “we think is a stable and sound [bank] start making speculative loans… and then what used to be strong banks get in trouble.”

Deutsche Bank’s major overhaul does not mean it will not survive, according to Rogers. However, the bank will never be the same and “this is serious trouble” for the lender as well as the entire financial system, the investor believes.

Rogers offered a reminder that some stable banks went bust when nobody expected it, as was the case with Lehman Brothers in 2008 or with another old bank, British Northern Rock.

“And it is happening again. If you go to Scandinavia you see some of those banks that have been around for years are in trouble now. This is nothing more than a sign of the times and we’re going to have a lot of problems down the road,” the investor said.

However, according to Rogers, Deutsche Bank is unlikely to collapse due to multiple warnings and enormous government efforts to support it. Rogers went on to explain that collapses occur unexpectedly and it’s when the global markets can crash.

“If Deutsche Bank were to collapse it would be a surprise. It would cause the global market to start to decline,” he said, adding that it would create a “snowball” that would see other major banks follow the same path.

James Beeland Rogers Jr. is an American businessman and financial commentator based in Singapore. Rogers is the Chairman of Rogers Holdings and Beeland Interests, Inc. He was the co-founder of the Quantum Fund and Soros Fund Management. He was also the creator of the Rogers International Commodities Index. - Wikipedia

ANZ, Deutsche Bank, Citigroup Face 'Cartel' Charges

Corruption is Everywhere - But in Australian and Global Banks?

By Sara Shayanian  

ANZ Bank, Deutsche Bank and Citigroup face criminal charges over alleged cooperation involving the sales of $2 billion worth of ANZ. shares. File Photo by Dan Himbrechts/EPA-EFE

UPI -- Three major financial institutions and several individuals face criminal charges in Australia of cooperating with each other in the sales of about $2 billion worth of stock shares, officials said.

The Australian Competition and Consumer Commission announced the charges against ANZ Bank, Deutsche Bank and Citigroup Friday.

"The charges will involve alleged cartel arrangements relating to trading in ANZ shares following an ANZ institutional share placement in August 2015," ACCC Chairman Rod Sims said in a statement.

"ANZ and the individuals were knowingly concerned in some or all of the conduct."

Cartel behavior occurs when businesses work together, instead of competing, to drive up profits.

ANZ denied it acted unlawfully in the sales of nearly 81 million shares worth $1.9 billion.

The deal was underwritten by Deutsche Bank, Citigroup and JP Morgan Chase as part of a bid by ANZ to raise capital to meet regulatory requirements.

"We believe ANZ acted in accordance with the law in relation to the placement and on that basis the bank intends to defend both the company and our employee," ANZ Chief Risk Officer Kevin Corbally said.

ANZ said the proceedings relate to an arrangement made between lead managers over the supply of bank shares. It noted criminal proceedings will likely be brought against ANZ Group Treasurer Rick Moscati.

Citigroup and Deutsche Bank vowed to "vigorously defend" against the charges. ANZ said it would also fight the accusations against Moscati.

If found guilty, the companies could face maximum penalties of 10 percent of annual turnover, or three times the benefit gained from the crimes. Individuals could face up to 10 years in jail.

Keiser: Deutsche Bank ‘Technically Insolvent’, Running a ‘Ponzi Scheme’

Oh dear, here we go again

© Luke MacGregor / Reuters

Max Keiser hit out against Deutsche Bank in the latest episode of his RT program Keiser Report, saying the bank was “technically insolvent” despite assurances from German Finance Minister Wolfgang Schaeuble that he had “no concerns” over his country’s biggest bank.

Deutsche Bank shares are down 40 percent since the beginning of the year, falling below their price at the time of the 2008 financial crisis. The bank suffered record losses of €6.8 billion in 2015.

With a balance sheet now eclipsing JP Morgan’s, Keiser warned that the bank will sooner or later have to admit to insolvency and say “we need either a huge bailout or we gotta close up shop.”

However, German Finance Minister Wolfgang Schaeuble dismissed concerns over Germany’s biggest lender, telling Bloomberg he was not worried about its future.

Deutsche Bank CEO John Cryan also played down the concerns in a published letter to staff on February 9, describing the bank as “absolutely rock-solid” and “strong”.

“On Monday, we took advantage of this strength to reassure the market of our capacity and commitment to pay coupons to investors who hold our Additional Tier 1 capital,” Cryan wrote. “This type of instrument has been the subject of recent market concern. The market also expressed some concern about the adequacy of our legal provisions but I don’t share that concern. We will almost certainly have to add to our legal provisions this year but this is already accounted for in our financial plan.”

The bank’s contingent convertible (CoCo) bonds also plunged in value this year. CoCo bonds are designed to be converted to equity when the bank gets into trouble. They have no maturity date and come with no promise to investors that they will get their money back.

Coupon payments on the bond are contingent on the bank’s ability to keep its capital above certain thresholds. If the bank does not make a coupon payment, investors cannot call for a default.

Deutsche Bank said last week that they would likely be able to make its coupon payment for 2016, after telling investors last month that it couldn’t make its 2015 payments.

Keiser described the move as a ponzi scheme saying, “You can’t just miss coupon payments. It’s called insolvency.”