‘Financing’ might sound like a pretty important area for a bank like Deutsche, but after just a few quarters, it’s outta there.
Bank reporting changes always prompt the question of ‘what are they trying to hide?’, even if historic numbers are restated. In an ideal world, of course, you shuffle the business lines in such a way as to flatter your institution. At the very least, you should aim to make it harder to be compared with peers, so that your woeful underperformance is less obvious.
All of which made Deutsche’s reporting of one area of its corporate and investment bank last year particularly odd. It can’t even make obfuscation work.
Chunk of stuff
In March 2017, the bank restated its historic results for a tweak to its structure. Among other things, out went the old ‘Loan Products and Other’ and in came ‘Financing’, which lumped the old loan business with a chunk of stuff from its fixed income and currencies (FIC) sales and trading line. The intention was to strip out stable buy-and-hold business from trading, or something.
Just one quarter later the bank was having to point out in its results announcements that its FIC business now looked a lot worse than peers because of the change. FIC was down 36% year-on-year in the third quarter – without the change, it would have been down 24%. The fourth-quarter results saw the same rigmarole: ‘Yes, we made this change, but please look at the numbers as if we hadn’t.’
Someone’s lost patience with all that now. On April 19, the bank issued another restatement of historic numbers, doing away with the Financing line. FIC, we are told, has been “updated to improve alignment with peer reporting and enable more relevant comparisons”.
Some 95% of the 2017 financing revenues have been stuck back into FIC.