Deutsche Bank refuses to provide US senators with information about Trump deals

Deutsche Bank

The bank refuses to provide information to the US senators.

(Photo: Reuters)

Frankfurt The Deutsche Bank With reference to banking secrecy, has denied four Democratic U.S. senators an answer to questions about their business dealings with U.S. President Donald Trump. “We hope you understand that Deutsche Bank must respect the legal and contractual limits that exist with respect to such confidential information,” wrote the bank’s law firm, Akin Gump, in a letter to Reuters on Saturday.

In the past, Germany’s largest money house, one of Trump’s largest lenders, had responded to requests from Democrats by referring to banking secrecy. Deutsche Bank declined to comment on the letter.

Trump’s family business, the Trump Organization, the White House and the Akin Group were initially unavailable for comment on Saturday. In the most recent case, there are questions from four democratic US senators about the prominent banking critic Elizabeth Warren.

It makes a difference whether individual senators or a Congress committee requests information, the bank’s lawyers explained. For years, congressional committees and prosecutors have been requesting information on Trump’s finances and regularly dealing with the courts.

The issue is now pending at the US Supreme Court. The hearing, originally scheduled for late March, has been postponed due to the spread of the corona virus. It should now take place on May 12th. Senator Warren was initially unavailable for comment on Saturday.

Deferred payment for Trump?

The four democratic senators had sent bank manager Christian Sewing a letter at the beginning of April with a deadline of April 21 to answer the questions. She was startled by a New York Times report.

According to this, representatives of Trump’s family business, the Trump Organization, approached Deutsche Bank to talk about postponing payments, at least for some of the loans. This process led to “new, serious concerns” when asked how much financial influence Deutsche Bank had on the President and his family, the senators wrote.

That Trump’s family business is asking the money house for a favor in the midst of a severe economic crisis “raises the question of whether Deutsche Bank treats the Trump Organization better than other companies in a similar situation.”

The senators fear that the government may either accommodate the bank’s regulatory issues if it responds positively to the Trump Organization’s request, or punish the bank if it does no financial favor to the family business.

The Trump Organization owns several hotels and golf clubs that are closed due to the corona crisis. The family business is run by Trump’s sons Eric and Donald junior.

More: The digital boss of Deutsche Bank’s private customer business has significantly shaped the online strategy. The austerity course curtailed its scope of action.


Voting rights advisers criticize Commerzbank’s remuneration system

Frankfurt The Commerzbank is holding a virtual general meeting for the first time this year because of the corona crisis. But even without protests from small shareholders on site, there will be no shortage of critical topics at the event on May 13.

Added to this is the criticism of Commerzbank’s remuneration system. The influential voting rights advisor Glass Lewis and his German subsidiary Ivox recommend that shareholders reject the slightly modified remuneration system for members of the Management Board in March 2020. This emerges from the recommendations of both companies for the Annual General Meeting, which are available to the Handelsblatt.

“From our point of view, there is great potential for improvement in the company’s remuneration policy,” says the Glass Lewis study. The goals on which the variable remuneration of the Board of Directors depends are too vague and too focused on the bank’s performance in the past.

Anglo-Saxon investors in particular often follow the advice of proxy advisors such as Glass Lewis and ISS at general meetings. If the Commerzbank shareholders did not endorse the remuneration system, the Supervisory Board would have to deal with it again. Germany’s second largest private bank did not want to comment on this.

Criticism of the number of positions

In his study, Ivox also speaks out against the planned election of Jutta Dönges to the Commerzbank Supervisory Board. The co-boss of the finance agency is to be elected as the new representative of the federal government to the control committee in May – together with Frank Czichowski from the KfW development bank.

Dönges and Czichowski are to replace State Secretary Markus Kerber and Anja Mikus, who heads the State Fund for Nuclear Waste Management. After Commerzbank’s rescue from the crisis, the federal government still has a good 15 percent stake in the bank – and anything but satisfied with the development of the money house in recent years. In Berlin, some have hopes that Dönges and Czichowski can give new impetus to the supervisory board.

But at least Ivox has reservations about the Dönges personnel. There are no doubts about the manager’s qualifications, according to the study based on guidelines of the BVI fund association. “However, there are concerns about the number of mandates.”

Dönges is already a member of the supervisory bodies of the FMS Wertmanagement and the Deutsche Pfandbriefbank. In addition, there is her job as managing director of the finance agency, which Ivox rates as an “executive position” like two mandates.

According to this method of counting, your work on the Commerzbank Supervisory Board would be your fifth mandate. And that would be two more mandates than Ivox recommends for people in an “executive position”. “Therefore, this election should be viewed very critically,” said the voting rights advisor.

The finance agency did not want to comment on Ivox’s criticism. However, a spokeswoman pointed out that Dönges had resigned from the supervisory board of Eurex Clearing in order to avoid conflicts of interest.

In contrast to Ivox, the parent company Glass Lewis has no objection to the choice of Dönges. Other persons familiar with the personnel also consider the appointment to be sensible, after all the financial agency manages the federal government’s participation in Commerzbank and is in close contact with the institute anyway.

Dönges is also highly valued in Berlin because it closely monitored the Commerzbank strategy review. Some also believe that Dönges’ work at FMS Wertmanagement cannot be viewed as a full supervisory mandate.

More concrete goals for 2020

The core remuneration system for Commerzbank board members has existed for several years. In March it was slightly adjusted to take account of the new requirements of the second Shareholder Rights Directive (ARUG II) and the new version of the German Corporate Governance Code. The most important innovation is that a maximum remuneration for each member of the Board of Management of six million euros per fiscal year has now been fixed.

The variable remuneration of the Management Board depends 70 percent on the achievement of the Group’s goals and 30 percent on the development of the department for which the respective Management Board member is responsible. In addition, individual goals have an impact on the amount of bonus payments.

When calculating the variable remuneration for 2019, the development of the bank and the respective department in 2017, 2018 and 2019 is taken into account. Glass Lewis criticizes this approach as backward and advocates “forward-looking” goals. However, this would have the consequence that Commerzbank could not set the bonus payments for 2019 until 2021 – and that the actual payment to the Management Board would then be postponed even further.

Voting rights advisers also take a critical view of the fact that the expectations of the Management Board are not described clearly enough. The performance goals are “only presented in a descriptive manner, but not clearly disclosed,” complains Ivox. As a result, it is not understandable for shareholders whether the goals for the Management Board are ambitious enough, emphasizes Glass Lewis.

Strictly speaking, these comments do not refer to the remuneration system, but to the remuneration report, which the Annual General Meeting does not vote on this year. Nevertheless, there are employees within Commerzbank who find this criticism justified. According to financial circles, the goals for the Executive Board in the 2020 financial year have therefore already been formulated more specifically.

It is of course another matter whether there will be any significant bonus payments in view of the Corona crisis 2020. In addition, the payment of Commerzbank management is generally rather below average compared to other institutions. In the past year, the total remuneration of the Management Board amounted to EUR 12.1 million. At the neighbourhouse Deutsche Bank the executive committee received almost three times as much despite a loss of billions.

Assistance: Jakob Blume

More: Bank President Zielke: “Must review Corona business model”


Million dollar bonuses for Goldman bankers drive shareholder advisors onto the barricades

Boston, New York The influential voting rights advisor ISS stands against the millions of bonuses for Goldman Sachs boss David Solomon and other top managers of the bank. Goldman Sachs ISS increased the bonus for CEO Solomon sharply, although some important key figures would have deteriorated in 2019 compared to the previous year, ISS criticized in a Reuters report on the night of Friday.

Solomon earned nearly $ 25 million in 2019. ISS recommended that shareholders vote against the salary package at the Annual General Meeting next Thursday. The shareholders’ vote is only of an advisory nature and is therefore not binding. Many funds and large investors follow the recommendations of voting rights advisers such as ISS and Glass Lewis.

Solomon succeeded Lloyd Blankfein at the top of Goldman Sachs in October 2018 and was able to look forward to a substantial salary increase in 2019. He collected a total of $ 24.7 million, of which 7.65 million were bonus payments. Solomon thus received 19 percent more money than in the previous year, although the investment bank’s profit plummeted 19 percent to $ 8.47 billion.

However, the highest-paid US banker remained long-time JP Morgan boss Jamie Dimon in 2019, who received $ 31.5 million after a record profit from the bank – 1.6 percent more than in the previous year.

A Goldman Sachs spokesman defended the salaries for top managers around Solomon. Goldman rewards long-term growth and does not place undue emphasis on short-term results. Income for 2019 reflected the significant long-term success of the top management.

More: How the corona crisis will weigh on US banks’ businesses.


US Federal Reserve makes it easier for banks to access short-term loans

Fed chief Jerome Powell

In contrast to the financial crisis, the Fed boss now wants to show more transparency from the start.

(Photo: dpa)

Washington The US Federal Reserve makes it easier for commercial banks to access their loans in the corona crisis. To this end, the requirements for short-term so-called intraday loans would be relaxed, she announced on Thursday. This is to ensure that lending will continue during the coronavirus pandemic. To this end, it temporarily waives the limits on unsecured loans and overdraft fees for banks that are eligible for this program.

This measure, which will initially apply until September, will not “significantly” increase the credit risk for the central bank. It should encourage banks to rely on the Fed for all their daily credit needs in a turbulent time. Some money houses could be exposed to “unforeseen intraday liquidity constraints” as a result of the corona virus pandemic and the resulting economic disruptions.

In addition, the Fed wants to play with open cards in the allocation of its multi-billion dollar loan aid in the fight against the corona crisis. For this purpose, details should be published at least once a month, who borrowed how much, announced them on Thursday. The Fed is for “transparency and accountability,” said President Jerome Powell. The central bank had announced a $ 2.3 trillion program that companies, states, and counties could access to help deal with the pandemic.

The now announced transparency offensive marks a departure from the secrecy that the Fed had operated during the 2007-2009 financial crisis. At that time, she refused to give the names of the borrowers – for fear of scaring shareholders. Details were only released after the so-called Dodd-Frank Act of 2010 obliged the central bank to publish it.

In some areas, however, the Fed wants to continue to maintain confidentiality, such as certain money market transactions. This should avoid stigmatization that could prevent companies from doing business when needed, the Fed said.

More: Fed launches multi-billion dollar Corona aid.


S&P downgrades Commerzbank’s credit rating

Deutsche Bank and Commerzbank

The rating agency warns of a significant deterioration in results.

(Photo: dpa)

Frankfurt The rating agency Standard & Poor’s (S&P) has given it a thumbs-up because of the economic impact of the corona crisis at Commerzbank, Deutsche Bank and other German financial institutions. At Commerzbank, S&P downgraded the credit rating by one grade to “BBB +”, the outlook remains “negative”, as the credit rating officers announced on Thursday.

At Deutsche Bank, S&P confirmed the rating of the creditworthiness with “BBB +”, but lowered the outlook to “negative” from “stable”. While the creditworthiness guards doubt that Commerzbank can implement its new strategy “Commerzbank 5.0”, including the planned sale of the Polish subsidiary mBank as planned, they see the restructuring of Deutsche Bank basically on track. Commerzbank and Deutsche Bank declined to comment.

With “BBB +” the credit ratings of the two largest German private banks are still three levels above the junk level. A negative outlook means that the credit rating is in danger of being lowered.

S&P warns that even if the economy begins to recover in the third quarter, all banks will see a significant deterioration in results, credit quality and, in some cases, capital resources. The risks that the economy will recover later and the situation will worsen are considerable.

At the Sparkassen-Finanzgruppe Hessen-Thüringen, which includes Landesbank Hessen-Thüringen (Helaba), S&P confirmed the credit rating with “A”, but lowered the outlook to “negative” from “stable” due to the corona crisis.

At the leasing provider Grenke The rating with “BBB +” also remained stable, here too the outlook was reduced to “negative” from “stable”. At Deutsche Pfandbriefbank (pbb), S&P left both the credit rating “A-” and the outlook “negative”.

More: False incentives, fraud, debts – the side effects of the corona crisis.


Oil dealer scandal in Singapore hits European banks

Bangkok Lim Oon Kuin worked on his raw material empire for more than half a century, which made him one of the most important oil traders in Singapore. Given the crash in the oil markets, a few weeks were enough to bring his company down. What remains are investigations by Singapore’s law enforcement officers and a mountain of debt of almost four billion dollars with several international banks – including the one German bank.

Hin Leong is the name of Lim’s company that became the first major victim of the oil crisis in Asia. Translated, the company name means “prosperity”. But there seems to be little left of the billion dollars Lim used to juggle the oil market and recently bet against a drop in prices.

Hin Leong filed for bankruptcy protection at the end of last week after the banks asked for the loans to be repaid. Now the auditing and consulting firm PwC should take control of the group during the debt restructuring talks, as the local newspaper “Straits Times” reported on Thursday, citing insiders.

The credit institutions threaten to remain on a large part of their claims. The remaining oil traders in the Southeast Asian financial metropolis are also facing a severe crisis: In response to the turbulence at Hin Leong, the banks are cutting their credit lines. The industry is now afraid of massive liquidity shortages. “Banks cancel their positions wherever possible,” commented industry consultant Jean-Francois Lambert. Singapore’s central bank was forced to warn the financial industry of a complete lending to the oil sector.

Hidden losses

The loss of confidence is also responsible for the impending credit crunch: Lim Oon Kuin, known in Singapore as O.K. Lim, admitted in an affidavit that he had hidden losses of $ 800 million. “I told the finance department not to let the losses show up in the books,” Lim wrote in the court document, according to the Bloomberg news agency.

The balance sheet for 2019 thus showed a profit of $ 78 million. “In truth, the company hasn’t made a profit in the past few years,” said Lim, whose assets the US magazine “Forbes” estimated in early April at $ 1.3 billion. The 76-year-old founder also admitted to having secretly sold millions of barrels of oil, which he guaranteed to the banks as collateral.

With the admission, Lim may be trying to avert harm from relatives who are also involved in the family business. His son, Evan Lim, who runs the Ocean Tankers spin-off with a fleet of around 100 oil tankers, said they hadn’t known about the events. As announced on Monday, Singapore’s police opened an investigation into Hin Leong.

The company’s approximately $ 4 billion in debt was only offset by assets of $ 700 million recently, the company reportedly told creditors. The losses at the 23 banks that loaned Hin Leong money could total $ 3.3 billion.

HSBC most affected

The UK Bank HSBC, which owes the company $ 600 million, is hardest hit. ABN Amro and the Rabobank from the Netherlands and the French Société Générale and the British Standard Chartered Bank has loaned Hin Leong between $ 200 million and $ 300 million each. Three local banks from Singapore collectively have claims of nearly $ 700 million.

Deutsche Bank and DZ Bank were also reportedly involved in the business with Hin Leong – with relatively low amounts. According to Reuters, Deutsche Bank is about $ 70 million and DZ Bank is about $ 40 million. Both banks did not want to comment on this on request.

Hin Leong was one of the largest suppliers of marine fuel in Singapore and played an important role in Southeast Asian gasoline trading. The group also owns a stake in a huge fuel depot. Sales talks with the Chinese company are now reportedly under way Sinopec.

More: How the Saudi Crown Prince gambles in the oil price war


“Without a state, it is currently not possible”

Frankfurt After the financial crisis, the rules for banks were tightened significantly. The corona pandemic now shows where the new rules work and where they don’t. Bundesbank board member Joachim Wuermeling is overall satisfied with the result. Nevertheless, he stated in the Handelsblatt interview that the financial institutions alone would be overwhelmed with the sharp rise in credit requirements in the corona crisis. “That is why it is currently not possible without the state as the guarantor.”

As part of a special program of the KfW promotional banks, the institutes grant loans in the corona crisis for which the state is 80, 90 or even 100 percent liable. From Wuermeling’s point of view, this is a good solution, after all, banks should not be able to provide enough loans if they cannot count on repayment. “If the state nevertheless wants to help companies for good reasons, it takes on the risks in the interest of the common good.”

The German banks are doing well in the corona crisis “according to the circumstances,” says Wuermeling. However, he fears that there will be more bankruptcies and loan defaults.

“The credit risks are really our biggest concern.” And they will only be reflected in the bank balance sheets with a delay. “I expect the burdens to increase significantly in the third or fourth quarter.”

Wuermeling rejects the creation of a European bad bank to reduce bad loans, as suggested by the ECB’s banking supervision. “This proposal is basically three years old and was not followed up for good reasons at the time.”

The top ECB bank supervisor Andrea Enria had already asked for a bad bank in 2017 in his old role as head of the banking authority Eba. “The reduction in non-performing loans has since made good progress even without such an institution, thanks in part to the resolute crackdown by the European banking supervisory authority SSM, which Andrea Enria now heads,” said Wuermeling. “That is why I do not believe that the initiative from that time will be taken up again at EU level.”

Read the full interview here:

Mr. Wuermeling, how are German banks doing in the corona crisis?
According to the circumstances, the German banks are still doing well. They currently have capital buffers in the hundreds of billions, with which they can grant loans and also cushion losses from loan losses.

In view of the corona crisis, do banks have to put their goals and strategies to the test?
It is already happening. Due to the corona crisis, all institutes are forced to update their earnings forecast for the current year. Returns are falling and risk provisioning is increasing. And after the height of the crisis, many banks will have to review their strategies. The pressure on banks with business models that were vulnerable before the crisis will continue to increase

How dangerous can bank failures and loan defaults become for the banks?
Credit risks are actually the biggest concern for us. Market and liquidity risks leave their mark immediately, but are likely to remain limited overall. By contrast, the losses caused by loan defaults are reflected in the bank balance sheets with a delay of weeks and months. I expect the burdens to increase significantly in the third or fourth quarter.

Can the next banking crisis develop from the corona crisis?
The German banking system is very resilient today. But this question can only be answered reliably if we have more clarity: about the containment of the epidemic, the economic effects and how well the government countermeasures such as the loans from the KfW development bank or the short-time allowance cushion the negative effects on the economy and how quickly the recession can be overcome. It was important that the state acted quickly and comprehensively. As of today, the expected losses should be manageable for the overall market.

Federal Minister of Finance Olaf Scholz recommended that the institutes “let five be straight” when lending. Are the banks too hesitant?
In my opinion, the banks have shown great willingness so far to ensure that the real economy is supplied with credit. But you cannot bear all the risks of a shutdown of the entire economy. The supervisory authority expects banks to carry out a responsible risk assessment even in times of crisis. If the banks simply opened all the gates when lending, sooner or later this would lead to a crisis in the banks. That would not help anyone.

The state assumes 80, 90 or even 100 percent of the liability for many loans. Right?
Banks should provide the real economy with credit even in times of crisis. But a responsible credit policy also means that banks reject loan applications if they cannot expect the loan to be repaid. If the state nevertheless wants to help companies for good reasons, it assumes the risks in the interest of the common good.

What is your interim conclusion for the banking sector after about two months of corona crisis?
It is now clear that we have learned the right lessons from the 2008 financial crisis by building up capital and liquidity buffers. The larger the buffers are, the longer banks are able to perform their tasks even in difficult times. In this respect, it was right to insist that these buffers be called for. The second good news is that the banking system works under the current circumstances. Consumers and businesses can access banking services even when many branches are closed. However, a single bank or savings bank can only prepare itself to a limited extent against a comprehensive threat to the solvency of a large number of borrowers.

So such crises cannot be overcome without state aid?
The banking system alone cannot cope with an extremely sharp rise in credit demand in the economy. That is why it is currently not possible without the state as the guarantor. We see it that way as a supervisor. If we discuss the lessons of the crisis at a later point in time, it will certainly be discussed.

What could solutions look like?
Instruments have now been developed ad hoc under high time pressure to use government aid quickly and in a targeted manner. Fortunately, in Germany we have established channels through KfW and other promotional banks to provide loans with government guarantees to the real economy relatively quickly via the banking system. In future, the regulatory framework for such measures must be designed in such a way that it can take full effect immediately

What do you think of the top ECB supervisor Andrea Enria’s proposal to set up a European bad bank? This could solve the problem of old bad loans before new bad loans are added in the wake of the corona crisis.
This proposal is essentially three years old and was not followed up at that time for good reasons. The reduction in non-performing loans has since made good progress even without such an institution, also thanks to the resolute crackdown by the European banking regulator SSM, which Andrea Enria now heads. That is why I do not believe that the initiative from that time will be taken up again at EU level.

BdB President Hans-Walter Peters, who has just left office, has demanded that the ECB should reimburse the banks already paid negative interest of 26.5 billion euros so that they can grant more loans in the corona crisis. What do you think of the idea?
There is no need to return negative interest at all. It is not a targeted levy for banks, but a monetary policy measure. Banks have to learn to deal with it.

Mr Peters also suggested that the ECB should buy subordinated bank bonds in order to strengthen the capital of the financial institutions.
In my view, that would also not be appropriate. Central banks in the euro zone are currently only buying senior bonds for risk reasons. In addition, the purchase of subordinated bank bonds from supervised institutions would also represent a conflict of interest for the central bank.

Do you think the banks’ demands for more aid are fundamentally absurd?
The previous easing should give the banks enough scope for more credit and loss absorption. It annoys me when now long-discussed proposals come up with the new coat of “crisis measure” on the table, for example the general recognition of self-developed software as equity. This distracts us all from the real challenge.

Before Corona, banking regulators demanded that banks cut costs and increase profitability. Are these demands still valid in the corona crisis?
If you want to act responsibly in the crisis, you have to set your priorities from now on. It is a top priority for us that bank operations and the cash flow are maintained – even when branches are closed and many bank employees work from home. That worked. And we want to make sure that banks continue to perform their important economic functions and lend without risking their stability. This shifted focus in no way means that all other aspects are now irrelevant in the long run. We will come back to this when the acute crisis has been overcome.

Financial supervision has loosened the rules for financial institutions significantly in the wake of the corona crisis. How long should these facilities apply?
The decisions for the exemptions were not easy for us. They can only serve to overcome the crisis. Nobody should bet that they will last forever. Of course, the banks will have the necessary time to regain their normal state of capital and liquidity. But everyone must be aware that we will pull the reins back after the crisis.

Will there be adjustments to banking supervision after the corona crisis?
One lesson from the crisis is that we still have to use digital technologies to a much greater extent in order to get an easier and faster picture of the situation of the banks. In the corona crisis, we initially spoke to large banks every day about their liquidity in a conference call. In the future, it would make sense to be able to access this data directly from the banks’ systems at any time.

How quickly can this be introduced?
The digital motto “think big, start small” should apply. In countries like Israel, the supervisory authority is already checking the liquidity indicators directly in the databases of the institutes. In Europe, we should first concentrate on simple indicators, where timeliness plays an important role. This would allow us to identify problems earlier, act preventively and thus possibly prevent some damage before it arises.

How do you rate the recommendation of the European Banking Authority (SSM) not to distribute dividends – is this appropriate or is it exaggerated in its overall rate?
It is in the interest of financial stability that banks retain their capital in the current situation in order to cushion risks and to be able to grant loans. In my view, there would have been reasons in one or the other special case to allow distributions. But we need a uniform approach in the euro area.

Does the distribution ban also apply to savings banks and Volksbanks?
It is not a prohibition of dividends – this is not legally possible if the capital requirements are complied with – but a recommendation to postpone distributions until early October. We also expect small and medium-sized banks, which are supervised by BaFin and the Bundesbank, to follow this recommendation. And we are very happy that this happens.

What do you do if an incredibly heavily capitalized Volksbank wants to distribute part of its profits despite your urgent recommendation?
It is understandable that it is not easy for a very well positioned bank to follow this. However, this is a collective precaution by all European banks. Because of the epochal challenge posed by the pandemic for the economy and society throughout the euro area, capital should remain in the financial system for now. No bank should go out there. So far, banking supervision in Germany has mostly succeeded in convincing institutions of the usefulness of such measures

Mr. Wuermeling, thank you very much for the interview.

More: Banking Association President Zielke: “Must review Corona business model”


The central banks are doomed to rescue in an emergency

Swedish Reichsbank

The world’s oldest central bank was founded because of a crisis.

(Photo: Sveriges Riksbank)

Walter Bagehot’s 1873 Lombard Street, an analysis of the British money market, is a kind of unofficial Bible for central bankers. Bagehot describes that in the event of a “panic” the central bank, in this case the Bank of England (BoE), should make money available as freely as possible. “Such loans should be made in a way that is most likely to cure panic,” he wrote. And added on the topic of “security”: “Everything that should be considered good bank security in normal times should serve this purpose.”

This is exactly what the European Central Bank (ECB) has now decided: Securities that are considered safe in good times are also valued during the crisis. For this reason, they will be accepted as security until September 2021, even if by then they should have received a weaker rating than “scrap paper” due to the corona crisis. The open question is whether and when the ECB will actively buy these papers.

Central banks were created to prevent crises. The Swedish Reichsbank was founded in 1656 to create order after a financial crisis. The Bank of England, when it was created in 1694, had the task of rebuilding the declining financial system and, moreover, of financing the bankrupt government. The history of the Fed, founded in 1913 in the United States, included the collapse of Wall Street in 1907, which could only be slowed down by the intervention of banker John Pierpont Morgan.

And that is exactly what central banks still do today: intervene in crises, lend money and, if necessary, finance governments. Ultimately, history defines their mandate more authentically than the legal framework to which they are subject.

The danger is that the role of saving angel will be expanded in every crisis. Partly because the financial system has become so complicated that no one else can stabilize it. But partly also because the central banks step in where politics fail. In Europe, this is clearly evident again in the dispute over construction aid in the corona crisis.

More: The ECB is now also accepting scrap paper


Chief legal officer of Deutsche Bank on the move

The Deutsche Bank towers in Frankfurt

It rumbles on the executive floors.

(Photo: AFP)

Frankfurt The Deutsche Bank will likely have to look around for a new chief legal officer soon. Two sources familiar with the facts confirmed to the Handelsblatt that the separation from Florian Drinhausen was almost a done deal.

A dispute between the 52-year-old and the legal director Stefan Simon appointed last year has been smoldering for a long time. Simon, who previously sat on the board of directors of the money house, has repeatedly criticized Drinhausen’s way of dealing with the bank’s various legal problems, it is said. This applies above all to the often tough line of the chief judiciary towards law enforcement officers and guards.

For example, when prosecutors searched Deutsche Bank at the end of 2018 for suspected money laundering, Drinhausen is said to have been loud against the investigators. At the time, his appearance had caused heated controversy within the bank.

Drinhausen was a partner at Linklaters for a long time before joining Deutsche Bank in 2014. A good two years ago he was promoted to chief legal advisor and thus head of the legal department. Since Simon was promoted to the legal board, it has been clear that Drinhausen will have problems, financial circles say.

Simon’s predecessor as legal director, today’s deputy chief executive Karl von Rohr, has so far always held a protective hand over the chief legal officer and thus prevented an earlier departure from Drinhausen. Now the separation will be done soon.

Deutsche Bank did not want to comment on the personnel. The “Spiegel” and the “Manager Magazin” had previously reported on the impending departure of Drinhausen.

More: Deutsche Bank is preparing for higher credit risks


Credit Suisse reports best quarterly result in five years

Credit Suisse headquarters in Zurich

The major Swiss bank is benefiting from booming trading in stocks and bonds.

(Photo: dpa)

Successful debut for the new Credit SuisseChief Thomas Gottstein: The major Swiss bank increased its profit in the first quarter of 2020 by 75 percent to CHF 1.3 billion, as announced on Thursday. The institute exceeded analyst expectations and achieved the best quarterly result in the past five years. In addition to significantly increasing income from bond and equity trading, proceeds from the sale of a fund platform and a negative tax rate also provided a boost.

“The first quarter under my leadership as the Group’s CEO was characterized by a very difficult environment with drastic effects from the COVID-19 pandemic,” said Gottstein. “Our asset management business model once again proved to be resilient.” However, dark clouds are increasingly emerging. In the coming quarters, the bank may need to build additional reserves and make allowances, the release said. The recovery in advisory and issuing fees could also be subdued.

In the first quarter, Credit Suisse increased loan provisions to CHF 568 million (previous year: CHF 81 million). Previously, major US banks had deferred billions in bad loans due to the economic stalemate, sharply falling oil prices and millions of unemployed, and had plummeted profits in return.

Credit card business charged

In the downturn, the banks are struggling with the consumer credit and credit card business, which they expanded during boom times. But neither Credit Suisse nor the arch rival are in this business UBS strongly committed. Both focus primarily on wealthy private customers and investment banking. Credit Suisse is the first major European bank to close a deal since the pandemic broke out.

Thanks to the turmoil on the stock exchanges, income from bond trading rose by 26 percent in the first quarter, while the institute increased its share trading by 24 percent. The Deutsche Bank, which wants to present its quarterly balance sheet on April 29, can no longer benefit from the stock trading boom. In the course of her corporate restructuring, which fell victim to 18,000 jobs, she had left the business.

Credit Suisse, on the other hand, has already completed the renovation under Gottstein’s predecessor Tidjane Thiam. The Ivorian had given up his position in connection with a shadowing affair in mid-February. The Gottstein, which is considered to be down-to-earth, is in many ways the alternative to its glamorous predecessor. The former investment banker set the first accent with a loan program from the Swiss banks for the medium-sized companies suffering from the corona crisis, in whose development he played a key role.

More: UBS and Credit Suisse only pay half of their dividend later because of Corona.