Deutsche Bank: Relief but no revival yet
Progress is limited and slow, and chief executive John Cryan remains under pressure
The best thing about 2017 for Deutsche Bank was that it couldn’t possibly be as bad as 2016, when the bank was almost sunk by concerns over profitability, funding and capital that destabilized investor and customer confidence.
Worries over Deutsche’s ability to generate the earnings to service its additional tier-1 coupons at the start of that annus horribilis led to stock price falls, while fears at the end of the year over settlements with the US Department of Justice led some hedge fund customers to pull balances and other customers to do less business with the bank.
Last year brought much relief.
In 2017, Deutsche was able to negotiate a settlement with the DoJ half the size of the $14 billion the department had initially demanded. The German bank had no problem raising €8 billion of equity in a rights issue, boosting its common equity tier-1 ratio from 11.1% to 13.8%.
Progress may have looked slow to shareholders in 2017 – especially when compared with other large banks now passing from post-recovery to sustainable growth – but at least it was in the right direction.