Share prices plummeting: Fear of the virus causes Dax to slide into the basement

The fear of a new lockdown is causing the Dax to rush into the depths in Frankfurt. At the start of the week, the leading index lost a good 4.4 percent. In addition to the fear of a pandemic, Deutsche Bank is also making negative headlines.

The fear of the rising wave of corona infections has seriously affected the Dax at the start of the week. In the end, the leading index narrowly escaped its biggest daily loss since mid-March, when the virus crash was still going on. From trading it went 4.37 percent lower at 12,542.44 points. Shortly before, it had fallen close to 12,500 points, to a low since early August.

Dax 12.642,97

According to market analyst Milan Cutkovic from the trading house AxiTrader, the increasing number of infections in Europe became the next disruptive factor in the stock rally that has recently stalled. The MDax also went down a lot. The index of medium-sized stock market stocks lost 3.68 percent to 26,499.95 points. In Germany, the number of new infections reported on Friday reached a high for almost five months, while in some neighboring countries there is an even higher incidence of infections. The British Minister of Health Matt Hancock did not rule out another lockdown in a BBC interview. In this case, stockbrokers fear catastrophic effects on the economy.

Leak puts pressure on Deutsche Bank

There were only losers in the Dax. At the end of the index, Deutsche Bank’s paper slumped 8.8 percent. The financial sector also suffered severe losses across Europe. The reason for this was a leak in confidential money laundering reports from the US Treasury Department about dubious payment flows, the so-called “FinCEN files”. Deutsche Bank is one of the banks explicitly mentioned in the report. Even if a few questions had to be clarified, the files in any case increased the regulatory and sanction risks for the industry, said market analyst Neil Wilson of Markets.com. The fact that the Frankfurt bank should be on a takeover wish list from Swiss UBS did not help in this environment.

Deutsche Bank
Deutsche Bank 6,96

Among the German small caps, the escalating dispute with the Spanish Telefonica group dealt the shareholders of United Internet and 1 & 1 Drillisch a powerful blow. After it became known that both had to cut their goals for this year due to rising costs of access to the O2 network, United shares collapsed by almost a quarter and 1 & 1 by almost 28 percent. Telefonica Deutschland’s shares followed the overall market by around four percent.

Investors seek refuge in the dollar

Across Europe, travel figures were once again hit particularly hard by investors’ fears. The papers of Lufthansa slipped in the MDax by 9.5 percent. That fit the message in the afternoon that the airline wants to make even deeper cuts in the fleet and staff due to the virus. The clouded prospects in the Dax brought the shares of the aircraft industry supplier MTU a minus of eight percent. The few positive rays of hope in the Dax index family were the shares of Hornbach, Shop Apotheke, Zooplus and Hellofresh, which have already been celebrated as Corona winners in the past few months, which are listed in the MDax or SDax and between 0.7 and 6.7 percent there won.

Lufthansa
Lufthansa 7,56

The stock exchanges across Europe also went downhill. In the end, the EuroStoxx lost 3.74 percent to 3160.95 points. The French Cac 40 was similarly downhill, while the British FTSE 100 lost around 3.4 percent. The downward trend was also evident in New York, where the Dow Jones Industrial lost around three percent at the close of trading here.

The euro also came under pressure as investors sought refuge in the US dollar. Most recently, $ 1.1742 was paid for the common currency. The European Central Bank (ECB) had meanwhile set the reference rate at 1.1787 (Friday: 1.1833) dollars. The dollar cost 0.8484 (0.8451) euros. On the bond market, the current yield fell from minus 0.50 percent on Friday to minus 0.52 percent. The Rex bond index rose by 0.08 percent to 145.73 points. The Bund future rose 0.34 percent to 174.66 points.

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HSBC, Deutsche Bank, ING and other big banks go public due to money laundering | Drug trafficking

HSBC, Deutsche Bank, JPMorgan Chase They are big names in the world of finance, but what happened to them? Were shaken today in the Stock Exchanges, after the revelations of a international consortium of journalists who accuses them of having allowed and facilitated the laundering of dirty money on a large scale.

In Frankfurt, Deutsche Bank closed the day with a drop of 8.76%. Standard Chartered, also in the spotlight, fell 5.82% at the end of the session in London.

In Hong Kong, HSBC reached its lowest level in 25 years, losing 5.33%. In addition to the group being cited by the investigation by the journalists consortium, it could face sanctions from China, as part of retaliatory measures against certain foreign countries.

Also one of those cited in this case, ING bank fell 9.27% ​​in Amsterdam. According to reports in the Dutch press, the bank’s Polish subsidiary has been supporting certain clients to send suspicious funds out of Russia for years.

He French bank Société Générale is also under investigation, and is accused of a lack of transparency towards certain clients of its Swiss subsidiary SGPB. Its share fell 7.66% at the end of the trading session in Paris.

The shock wave was also felt on the other side of the Atlantic: mid-session in Wall Street, the giant JPMorgan Chase it had lost 4.08%. In turn, Bank of America fell 3.89%, while Morgan Stanley and Wells Fargo fell 4.5% and 5%, respectively.

In its investigation, carried out by 108 international media outlets from 88 countries, the ICIJ, denounces the serious deficiencies of regulation in the sector.

Dirty money

The “FinCEN Files” research is supported by thousands of “Suspicious Activity Reports” (SAR) Sent to the US Treasury Financial Police, FinCen, by banks around the world, but “out of the public eye”. According to the ICIJ, for years astronomical amounts of dirty money have circulated by the most important banking institutions in the world.

These documents refer to about 2 trillion dollars (1.7 trillion euros) of transactions between 1999 and 2017. It would be money from drugs and criminal acts, and even from misappropriated fortunes in developing countries.

The research mainly points towards five major banksJPMorgan Chase, HSBC, Standard Chartered, Deutsche Bank y Bank of New York Mellon-– accused of having continued to circulate funds from suspected criminals, even after being prosecuted or convicted of financial misconduct.

Reports of suspicious activity, relied on by journalists from the consortium, “are not statements of crime or fraud, rather, they warn about potential cases of economic crimes“argues UKFinance, the British financial lobby, in a statement sent to AFP.

“It is simply a report intended for the guardianship authorities (…) Additional activities may take place and not present any suspicion or, on the contrary, confirm the original suspicion. (…) Guardianship authorities can also request a financial institution to maintain the relationship with a certain client to allow deeper investigations “, also highlights UKFinance.

Defending

HSBC defended itself by responding to journalists that it always complied with its legal obligation to report suspicious activity. Alleges that the ICIJ accusations are old or previous to an agreement reached in 2012 with the US Department of Justice.

Deutsche Bank, for example, it simply states that “there is nothing new”, and that it has invested heavily in tightening its controls.

Likewise, in the case of ING in Poland, the entity claims to have cut your links to companies suspected of fraudulent activity.

He French Société Générale, declared for its part in a statement, which was received by AFP that: “it strictly complies with all the regulations of the countries in which it is implemented (…) All the suspected cases it detects are, therefore, systematically declared to the competent authorities, these declarations include all the elements that the bank is able to communicate in accordance with local regulations. “

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Ex-boss Markus Braun’s megalomania: Wirecard wanted to take over Deutsche Bank

Updated on August 26, 2020, 8:39 a.m.

The Morning Briefing by Gabor Steingart – controversial, critical and humorous. Know what is being discussed politically. Today: the megalomania of the ex-Wirecard boss Markus Braun, the joys of the Americans, which are the pain of the Europeans, and the schools in North Rhine-Westphalia, which are not allowed to exclude students without masks from lessons.

One column

from Gabor Steingart

In a precisely researched story, the “Financial Times” reported this morning about the megalomania of the ex-Wirecard boss and co-owner Markus Braun. Because he had hired McKinsey to prepare a plan to take over Deutsche Bank. The code name was “Project Panther” and could just as well have been called “Project megalomania”.

The new company should be named “Wirebank” and “think and act like a fintech bank on the scale of a global bank”. McKinsey estimated that it could generate six billion euros in additional profit by 2025. Furthermore, the McKinsey report promised a doubling of the joint stock exchange valuation at almost 50 billion euros.

In the opinion of the FT, however, another point might have been decisive for the “Project Panther”: a takeover of German bank offered the prospect of an exit from the fraud that Wirecard had operated. Round 1.9 billion euros in cash were missing from their accounts and much of their business in Asia was in reality an elaborate hoax. By embedding the Wirecard business in Deutsche Bank’s balance sheet, it was possible to conceal the missing cash and replace the swindle with real business with real customers.

However, the plan had a catch: In order to prepare such a deal seriously, needed Wirecard an opinion from KPMGthat gave him flawless running the company as well correct balance sheets confirmed. KPMG’s approval never came.

Shortly afterwards, Wirecard filed for bankruptcy and Braun was arrested. The FT balances:

“His dream of taking over Deutsche Bank had turned into a nightmare.”




Markus Braun.

© imago images/Sven Simon

Olaf Scholz ensures compliance with old folk wisdom

Addendum: The big ones are let go, the little ones are hanged: Ironically, the social democrat Olaf Scholz ensures that this old popular saying is upheld.




Olaf Scholz.

© imago images/Alex Halada

Neither the Berlin supervisory bodies nor the managers in Bonn responsible for controlling Wirecard are being prosecuted. For this, however, one loses Most of the workforce of the financial service provider the workplace. Around 730 of 1,300 employees will be given notice, declared the insolvency administrator yesterday Michael Jaffé.

The joys of the Americans are the pains of the Europeans

Donald Trump doesn’t need a new trade war with Europe – he has the dollar. Its exchange rate against the euro is falling and falling, which makes it more than just easier for American exporters to export. Because: If the dollar falls and the euro rises, US goods become cheaper.




The joys of Americans are the pains of Europeans. European exporters – and that means German industry in particular – are troubled by the solid euro. Goods worth over 200 billion euros put only the German corporations, first and foremost the automotive, chemical and mechanical engineering industries USA from. A large part of the costs – wages and intermediate products – are incurred in the hard currency euro, while the proceeds are settled in the soft currency dollar.

There are essentially two reasons behind the tension in the transatlantic monetary system to lead:

First: The exchange relations of the currencies are always a mirror of the economic resilience. America is vulnerable in the midst of the pandemic. It is unclear whether the country will face lockdown after a Democratic takeover. Joe Biden presents himself to voters as the early Merkel.

Secondly: The dollar is losing its nimbus as an anchor currency. Meanwhile, in the past every shock in the world – oil price shocks, terrorist attacks, threat of war – animated investors to buy dollars, the “flight to safety”, this time the USA itself is the epicenter of political uncertainty. Trump is the Vesuvius of Washington. He can spit ash and lava at any time.




Donald Trump.

© imago images/ZUMA Wire

Conclusion: In view of this currency disparity, Germany has to secure the cost base of its domestic production, including on the wage side – no Corona helps. In other words: if the euro hits the gas, it should Wage policy slow down. This connection is socio-politically fatal, politically undesirable and nevertheless imperative for the overall economy.

Schools in NRW are not allowed to exclude students without masks

Crashing defeat for the Düsseldorf state government: Schools in North Rhine-Westphalia are not allowed to exclude students without a mask from lessons. The Düsseldorf administrative court pointed this out on Tuesday. After refusing to wear masks, two students at a grammar school in the Lower Rhine region defended themselves against the exclusion from classes in court – with success.

In North Rhine-Westphalia need students to secondary schools Wear a mask in class and during breaks. This causes frustration in the educational institutions. Laschet is coming under increasing pressure with his school policy:

The School Management Association of the country has criticized the responsible ministry in an open letter. Already in the second paragraph of the letter it says that school policy takes place in connection with the organization of school lessons under the conditions of Coronavirus-Pandemic “too little” the actual Framework the schools was.

“The requirements of the Ministry of Education can hardly be met due to the local conditions and the general school conditions!”

Almost 44,000 people have already signed an online petition against the mask requirement in schools. It was initiated by Miriam Schmitz, a woman who worked in the Morning Briefing Podcast says:

“I have a child in high school, fifth grade. My little one came to this school brand new and would have liked to get to know his classmates. But with the mask requirement, he has never seen half of his class.”

Louisa Dellert in the Moring Briefing Podcast

Louisa Dellert, better known as Lou, visited us at PioneerOne yesterday. The 31 year old is Entrepreneur, podcaster and influencer. She has around 400,000 followers on Instagram. With her I have for the Morning Briefing Podcast spoken – about the contradictions of Corona politics, the human longing for closeness and their idea of ​​eroticism in times of the pandemic.




Electoral reform in the coalition committee

The coalition committee met tonight under the leadership of the Chancellor. Two topics were in the foreground: On the one hand, there was electoral reform, which is intended to prevent the Bundestag from constantly growing and soon becoming larger than the People’s Congress in China.

The result:

  • Everything that helps not to make the corona consequences noticeable was decided. So an extension of the Short-time allowance and the enactment of Social contributions for companies in need.
  • The painful one for the MPs Reform des Bundestag – because a reduction in size means the elimination of mandates – was postponed to the next legislative period.

My colleagues from “Capital Newsletter” have more information about the negotiation marathon that has ended.

The dispute between Turkey and Greece is coming to a head




Federal Foreign Minister Heiko Maas and the Greek Prime Minister Kyriakos Mitsotakis.

© imago images/ANE Edition

The dispute between Turkey and Greece over the Turkish Natural gas explorations off the Greek islands is coming to a head. Foreign Minister Heiko Maas has now called on both NATO partners for talks during a visit to Athens:

“What we urgently need now are signals of de-escalation and a willingness to engage in dialogue.”

The situation in the eastern Mediterranean has become one “Play with the fire” according to the SPD politician.

“Even the smallest spark can lead to a disaster.”

At the same time sharpened Maas the conflict continued, in which he stood behind Greece. He assured Athens the full support of the EU, which in Ankara would be considered impossible Willingness to dialogue can interpret. Conclusion: The honest man Maas made his appearance as an arsonist.

The great fearless man in the German economy



Michael Mronz.

© picture alliance/dpa

Michael Mronz is the great fearless man in the German economy. The organizer of Europe’s largest horse show, who cannot ride himself at all, is also the most committed operator of an Olympics in Germany in 2032. He wants to start the sports facilities Rhine and Ruhr connect to a large Olympic Park, which should not result in any building ruins and no ecological ancillary costs. “Rhein Ruhr City 2032” is what he calls his initiative, which the NRW state government and meanwhile the Olympic Committee support.

But what do they think Citizen? At least in Munichwhen it came to the 2018 Winter Olympics, they thwarted the Olympic planners democratically. But Mronz, the indestructible, believes not only in the radiance of the Olympics, but also in the beauty of democracy. In the Morning Briefing Podcast, he says:

“I am convinced that people would like and enjoy saying yes to this idea of ​​the Olympics.”

Indeed, the new thing about the Mronz Plan is that the region should not suffer for the Olympics, but rather benefit from the Olympics. The cultural “We in NRW” would be achieved through investments in Mobility and digitality economically primed: gold for North Rhine-Westphalia.

I wish you an optimistic start to the new day. Sincerely yours

Gabor Steingart

“Steingarts Morning Briefing” informs about current world and economic events. The “Pre-Breakfast Medium” is a modern form of the miniature daily newspaper which, in addition to news, comments and graphics, also publishes exclusive interviews with opinion leaders from politics, business and culture. The podcast of the same name is Germany’s leading Daily Podcast for politics and business.

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DAX outlook: mood barometer cloudy outlook

Frankfurt In the past weeks there have been repeated attempts to recover the course, on some days one could believe that the corona pandemic has already been overcome. But on Friday, disillusionment returned – the collapsed ifo business climate index made the whole dilemma clear.

The course of the mood barometer looks like a “Highway to Hell”, was the analysis of the VP Bank. The index is now significantly below the values ​​of the crisis year 2009. The simple message for the future was: “Massive income losses are imminent. We will all get poorer. This applies not only to Germany, but to all economies. ”Sometimes it is better to hear the unvarnished truth.

Other analysts and experts are also skeptical about the weekly outlook. Cautious savings by consumers and companies create a completely different economic and inflation environment than one knows from the post-war period, the analysts at MFS Investment Management believe.

They expect the earnings recovery to be weaker than the market and point to the possible dilution of earnings through capital increases. They particularly highlight 2008 as a comparison.

“When the extreme risk of the international financial crisis subsided, companies were no longer concerned with distributions, but with recapitalization. To this end, new shares were issued – at the expense of existing shareholders, whose capital was heavily diluted, ”said the investment professionals. The new wave of recapitalization has probably just started. In the past few weeks, leisure companies and service providers in the United States and Europe have already offered new shares.

Warning to bargain hunters

The BLI – Banque de Luxembourg Investments is also cautious. “The financial markets are currently giving the impression that they are underestimating the extent of the economic damage and are counting on a rapid recovery as soon as the containment measures are reversed,” is the BLI’s assessment.

Many investors are conditioned to view any decline as an opportunity to buy. However, the analysts recall that while the fall in share prices in February / March was dramatic, the valuations were also very high. As a result, the markets today are anything but cheap, especially after the recent price recovery.

Quality companies with a very solid balance sheet, one or more sustainable competitive advantages and the ability to self-finance should be preferred. The main factor that will continue to speak for stocks remains the low interest rate level and thus the lack of alternatives. At the same time, gold will become an “indispensable part of a balanced portfolio because of the inflation risks.”

After the significant recovery since mid-March, the European stock market has recently lost some momentum, the Weberbank experts believe. In addition, the balance sheet season that is already underway shows significant impacts on corporate balance sheets due to the global “lockdowns”.

Correspondingly, the analysts have also significantly lowered their profit expectations for industrial companies, but also for the banking and energy sectors. Due to the economic slump, banks faced increased write-downs on their credit books and the massive drop in yields clouded interest income. Most recently, they also negatively impacted the rating agency Standard & Poor’s (S&P).

The Deutsche Bank and the Commerzbank were therefore particularly under pressure on Friday “We continue to distance ourselves from these sectors and prefer creditworthy pharmaceuticals or companies from the non-cyclical consumption. In addition, titles from the technology sector are promising in our eyes, ”said the Weberbank experts.

Central banks meet worldwide

If the economic situation continues to be poor, the states and central banks will have to take further support measures. Robert Greil, chief strategist at Merck Finck Privatbankiers, sees an opportunity for this next week because the European Central Bank, the US Federal Reserve and the Bank of Japan are meeting.

“As a result of the unprecedented economic downturn caused by the Covid 19 consequences, all central banks will reaffirm their willingness to support,” says Greil. The economic downturn left neither governments nor central banks a choice but to take further measures to support and recover the economy.

The gross domestic product for the first quarter of 2020 will be published in the euro area on Thursday, and new growth figures will come in the US on Wednesday. Further important economic data in Germany are the preliminary inflation figures and the labor market report for April.

According to DZ Bank, the next quarter should bring an improvement in the economy, but there does not have to be a “V” or “I” recovery. This is not ignored on the stock market, many stocks are up to 80 percent down.

A large number of “mega-caps” hold up against this, mainly in the USA. Amazon, Google, Microsoft, Netflix and Facebook, but also Adobe or Comcast, be stable on the way. Things are also going well for the great values ​​of the “old economy”, including Pepsico, Johnson & Johnson, Procter & Gamble, Home depot and Pfizer. The German Leading index Dax the strategists from DZ Bank see 11,200 points by the end of the year, and the S & P-500 for US equities at 2,800. This would at least stabilize in the medium term.

More: Yield in Corona times: With which investments you can still make money

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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.

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Deutsche Bank loses its digital strategist

Markus Pertlwieser

The digital expert at Deutsche Bank leaves the company with an unknown destination.

Frankfurt Deutsche Bank is facing a prominent departure: Markus Pertlwieser, previously the top digital strategist in Deutsche Bank’s private customer business, will leave the institute in the foreseeable future. A corresponding report by the “Manager Magazin” was confirmed in financial circles. Deutsche Bank did not want to comment on the information.

Pertlwieser’s farewell is a loss for the institute. The former partner of the management consultancy McKinsey was the head behind the bank’s strategy towards a platform concept that has long been propagated by CEO Christian Sewing. “Either we become a fairly interchangeable provider of financial products that are sold on large platforms. Or we want to be the ones who design the shelves, ”Sewing postulated at the banking summit in the Handelsblatt in 2018.

Pertlwieser had expressed himself similarly several times. Among other things, the digital boss had introduced digital asset manager Robin or Deutsche Bank’s interest rate market at Deutsche Bank, through which customers can use fixed-term deposits from other banks. In doing so, he created in-house competition for his own products – a procedure with which he not only made friends in the group.

However, the institute’s tough austerity measures had recently significantly curtailed Pertlwieser’s room for maneuver. According to Finanzkreise, the bank is looking for an external partner for the further development of “Yunar”, an app for bonus programs for a virtual wallet (“Mobile Wallet”), because they no longer want to make the necessary investments on their own. Ultimately, Yunar could also be sold.

However, this is just one example of the bank’s shrinking digital ambitions. As the last component of Pertlwieser’s agenda, the bank wants to activate a digital insurance broker on Monday, according to financial circles – initially for 100,000 customers, then over the summer for all customers of the institute.

This means that digital expert Pertlwieser no longer has an exciting task in his riding. Pertlwieser and the bank had apparently not been able to agree on any other use for him that would have appealed to him.

More: Amazon is the big role model in platform economy

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How large corporations act in the corona crisis

DThere are currently no big deals. Mergers, acquisitions, IPOs – everything the investment banker likes to boast about has initially put the Corona crisis on hold. And yet Patrick Frowein is anything but bored. “I haven’t worked as much and intensively in a long time as I do now,” says Frowein, Deutsche Bank’s top investment banker in German-speaking countries, in an interview with F.A.Z. “And that also applies to my entire team.” After all, every company is currently concerned with how to get through the crisis safely and with sufficient liquidity, and some of them are getting ready for the time afterwards.

Tim Kanning

TUI and Adidas show that even large corporations are stumbling, both of which had to access rescue loans from the state development bank KfW. In both cases, Deutsche Bank was not only a financing partner, but also an advisor, as Frowein points out. However, he does not want to comment on why a corporation like Adidas, which has enjoyed success for years, has to resort to government aid so quickly.

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How professionals position themselves on the stock exchange

Frankfurt Stock Exchange

Many investors are puzzled as to where the markets will go.


(Photo: dpa)

Frankfurt The uncertainty is great. The oil price and many stock prices are in the basement. The mood among many managers is bad. The corona crisis keeps the financial markets in suspense every day. Many investors are now thinking more than ever about where to invest their money in these unstable times.

Because the violent ups and downs on the markets shows that there is still no peace on the stock exchanges. This leaves many investors in doubt about their previous investments. Keep or prefer to sell? This is an important question for many investors, especially with equities.

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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”

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Disastrous economic data weigh on the Dax

Frankfurt The series historically poor economic datathat investors currently have to digest does not stop. That is also a burden for the German Leading index Dax. The stock market barometer closed on Friday 1.7 percent lower at 10,336 points.

“This drug had recently made a significant leap on the stock markets,” said Thomas Altmann, portfolio manager at QC Partners. “Therefore, this announcement is a clear warning to all euphoric investors.”

The puzzle is only slowly completing, how badly the corona pandemic is paralyzing the global economy. It was announced on Friday that the UK retail collapsed by more than four percent in March compared to the same period in the previous year – a decline that was not achieved even in the 2008 financial crisis.

Also in Japan the retail sector is idle: Merchants in the capital city of Tokyo reported a drop in sales of almost 35 percent in March. A similar decline to this extent is not to be found in the Bloomberg financial services time series.

There were also bad numbers from industry on Friday: The European commercial vehicle market fell almost half in March due to the coronavirus pandemic. With 105,196 vehicles, 47.3 percent fewer were registered than in the same month last year, the responsible industry association Acea announced on Friday in Brussels.

The number of registrations had already declined in January and February, but the decline in March was again considerably greater. The falls were most pronounced in the countries particularly hard hit by the Covid 19 pandemic: Italy (minus 66.1 percent), Spain (minus 64.4 percent) and France (minus 63.1 percent).

The managers surveyed by the Ifo Institute also assessed their situation as worse and are also more skeptical about the future. The published on Friday Ifo business climate index for April fell more clearly than expected: from 85.9 points in March to 74.3 points. That’s the lowest value ever measured. Economists interviewed by the Reuters news agency had expected a drop to 80.0 points. “The mood among German companies is catastrophic,” said Ifo President Clemens Fuest.

On Thursday, the GfK consumption barometer in Germany and the purchasing manager indices for the European service sector signaled that Germany and Europe were heading for a severe recession. The European Union is steering because of the corona crisis, according to EU Industry Commissioner Thierry Breton towards a drop in economic output of five to ten percent.

In addition, investors are also looking at the Federal Chancellor. Angela Merkel consults with representatives of business and trade unions on the corona crisis. This could also involve possible further easing and economic policy measures.

Look at the individual values

Deutsche Bank and Commerzbank: 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. In the 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 M-Bank, as planned, they see the restructuring of Deutsche Bank basically on track. The shares of the two largest German financial institutions fell by 6.8 percent (Deutsche Bank) and 4.1 percent (Commerzbank) and were among the biggest losers on the stock market on Friday.

Lufthansa: Down eight percent it went for the papers from Germany’s largest airline. So that leads Lufthansa the Dax’s list of losers. At € 7.20, the shares cost less than they had since the Sars pandemic 17 years ago. According to insiders, the airline plans to put together a government aid package of up to ten billion euros early next week. The loss increased to EUR 1.2 billion in the first quarter. Due to the pandemic, air traffic in Germany is almost completely stopped.

Nestlé: The Swiss food giant, on the other hand, is doing very well. Nestle accelerated its growth in the starting quarter 2020. Organic sales growth in the first three months was 4.3 percent, as Nestle announced on Friday. The share rose 1.8 percent. As the full impact of the Covid 19 pandemic could not yet be assessed, Nestle is tentatively sticking to the original outlook for 2020 as a whole. The Group expects organic sales growth and the underlying operating profit margin to improve.

Sanofi: The French pharmaceutical company benefits from the strong demand for painkillers and antipyretic due to the spread of the coronavirus. In the first quarter, currency-adjusted profit rose by 16.1 percent to 2.04 billion euros Sanofi announced. Sales climbed 6.6 percent to EUR 8.97 billion. Around half of the profit and sales growth is due to the corona pandemic. The corona effect will subside in the course of the second quarter. Sanofi confirmed the forecast for 2020. The group has set itself a five percent increase in earnings per share. The papers climbed 1.9 percent.

Eni: The Italian oil company the corona pandemic and collapsing oil prices drove a billion dollar loss in the first quarter. The net loss was 2.9 billion euros, as the Italian company announced on Friday in Rome. Had in the previous year Eni earned just under 1.1 billion euros. For example, Eni had to adjust the book value of its oil inventories to falling market prices, as well as depreciation on oil and gas activities. Adjusted, Eni achieved a small plus of 59 million euros, a fraction of the previous year’s profit of 992 million euros. Revenues plummeted by a quarter to around 13.9 billion euros. The stock lost 2.9 percent.

Look at other asset classes

Oil prices continued their recovery from the previous day on Friday despite the price losses in the meantime. The decisive factor on Wednesday, however, was not the easing of weakness in demand and excess supply, rather political tensions between the USA and Iran caused rising risk premiums for crude oil. In Asian trade, a barrel (159 liters) of the North Sea type Brent last cost $ 21.57, up 1.1 percent. The US WTI was traded at $ 17.09 per barrel, up 3.5 percent.

The euro exchange rate rose slightly on Friday. The European common currency was trading at $ 1.0804 in the late afternoon. The European Central Bank (ECB) set the reference rate on Friday at $ 1.0800 (Thursday: 1.0772).

Italy’s central bank Market insiders broadened their purchases of domestic government bonds on behalf of the ECB on Friday. The Banca d’Italia is buying slightly more titles on average than in the past few days, said a primary trader. A second insider said that she was more active on the market. Yields on ten-year bonds fell around ten basis points over the course of the day to 1.899 percent. They had previously climbed above the two percent mark when disappointment over the results of the EU summit on Thursday spread on the bond market.

With agency material.

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