No sooner had exiting-CEO Anshu Jain declared that he really wished he could have set Deutsche’s share price on a sounder footing than current CEO John Cryan has seemingly pulled the rug from beneath the stock ahead of his ‘Strategy 2020’ announcement on October 29th.
In a textbook case of late night kitchen sinking, Cryan announced €5.8bn of writedowns in the corporate banking and securities and private clients divisions, €1.2bn of litigation provisions, and a €0.6bn impairment charge in Hua Xia Bank late on Thursday night. In combination, these measures are expected to lead to a year-to-date net loss of €4.8bn. Although the bank’s stock fell 6% in after hours trading in New York last night, it rose in Europe this morning on the perception that Deutsche won’t need a further rights issue as a result of the charges.
If you’re a managing director at Deutsche, it’s all a bit worrisome. Ever since 2012 MDs at the German bank have had a large proportion of their bonuses withheld for five whole years. Those MDs can but sit back and watch as stock that denominates three full years of bonuses gyrates. Secondly, Deutsche is known for its abnormally punitive clawback policy – the slightest loss at group level means that none of the bonuses due to vest in the loss-making year are paid. Unless Deutsche can somehow undo its €4.8bn ytd loss between now and January, this clawback clause looks set to be activated. 2015’s bonuses also look to be affected by the kitchen-sinking. – Cryan said yesterday that the loss, “would of course be factored in some way” into the bank’s decisions on bonuses for the past 12 months.
Separately, there was some excitement on Twitter yesterday when Business Insider’s deputy editor suggested that Morgan Stanley’s chief cartoonist, Andrew Sheets, was appearing on Bloomberg. Sheets isn’t, in fact, employed by Morgan Stanley as a cartoonist – he’s a credit strategist. However, he does draw cartoons to accompany his credit notes and has published a book of his work which is thoroughly enjoyable according to the (two) reviews on Amazon.
Ex-Deutsche trader in Russia is contesting his dismissal. (Reuters)
Fear the commodities traders. (Alphaville)
It’s ok, an ex-Goldman banker is lending money to the US oil and gas industry. (Financial Times)
23% of men who’ve taken coding courses earn six figures. (Quartz)
An idiot’s guide to quantitative easing. (Credit Suisse)
Petrodollars were just another form of quantitative easing, says Barclays. (Bloomberg)
A manager at ICAP in London was so keen to work with Tom Hayes in Japan that he asked to work the night shift. (Reuters)
UBS’s chief economist for wealth management died of a heart attack aged 48. (Bloomberg)
And the best equity researchers in America work for… J.P. Morgan. (Institutional Investor)
Credit Suisse is hiring a new head of Americas cash trading from Goldman Sachs. (Business Insider)
What to do when your friends make more money than you. (Lifehacker)
How to become a ‘super forecaster.’ (NYMag)
Photo credit: ajari