By Pam Martens and Russ Martens: July 5, 2019 ~
According to press reports around the globe, there’s going to be a hot confab this Sunday by the Board of Deutsche Bank that will focus on the potential to create a so-called “bad bank” to hold some of Deutsche’s toxic assets along with discussions of cutting 15,000 to 20,000 employees from the payroll – meaning as many as one out of every five employees could get the axe. A big part of the job losses will hit Manhattan where Deutsche Bank has a heavy presence on Wall Street — which it plans to severely pare back.
Version - Bank - Moves - Deutsche - Bank
Here’s the short version on why the bank is contemplating these radical moves: Deutsche Bank has reported losses in three of the last four years; its share price has lost 90 percent of its value since February of 2007; as of the close of trading on Wednesday, Deutsche had $16.14 billion in common equity value versus $49 trillion notional (face amount) in derivatives; it’s had four different CEOs in just over four years; it can’t find a merger partner; and its home country of Germany, unlike the “throw money at the Wall Street mega banks” U.S. government, doesn’t seem inclined to hand a life line to Deutsche Bank’s sinking hulk.
To wrap your mind around the concept of a “bad bank,” let’s look at what Citigroup did in January 2009. After turning its former CEO, Sandy Weill, into a billionaire from obscene stock option grants and paying former Treasury Secretary Robert Rubin over $120 million over a decade for a seat on its Board, and other similar drunken sailor compensation sprees, accounting tricks and a toxic derivatives book, Citigroup found itself teetering during the 2008 financial crisis. The U.S. government infused $45 billion in equity capital...
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