I worked for Deutsche Bank as a young banker during the Alfred Herrhausen era. At that time, DB was on top - with its sterling balance sheet and AAA debt rating, it was considered the most powerful bank in Europe and dominated corporate lending and investment banking for German industry. Back then, we looked up to only two other financial institutions: Morgan Guaranty for its corporate lending activity, and Goldman Sachs for its underwriting, trading and advisory services. Herrhausen dreamed of surpassing both of these banks and set DB on the course of becoming the the most powerful investment banking house with the acquisition of Morgan Grenfell in 1989. At the time, it seemed like a brilliant strategic move, bringing Anglo-Saxon know-how into the German institution. But it contained it seeds of the bank's downfall. We'll never know whether the strategist Herrhausen could have corrected course, since he was assassinated shortly after closing the deal with London bank. I briefly rejoined DB's investment bank while Hilmar Kopper was CEO, but by then the bank was already faltering. The acquisition of the New York casino bank Bankers Trust in 1999 sealed its fate for good.
"There's no doubt Deutsche Bank bought itself plenty of trouble in buying BT, Wall Street's bad-boy institution.For starters, BT executives routinely pocketed unclaimed customer cash in what prosecutors described as a vast slush fund. In 1999 the bank pleaded guilty to three felony charges and agreed to pay $63 million as part of a settlement with state and federal authorities."
To make matters worse, Bankers Trust was the leading developer and purveyor of derivatives - and these "innovative" products eventually led to the global financial collapse of 2008, from which we are still recovering. DB was at the center of EVERY single scandal surfacing from the meltdown, and has been forced to pay $billions in fines and no doubt will continue to pay $billions more for pending lawsuits. Bankers Trust also brought Donald Trump into DB after every other New York bank shunned the charlatan real estate developer. That relationship, along with DB's laundering of $billions for Russian oligarchs , has placed the bank in the cross-hairs of US special prosecutor Robert Mueller.
DB's new CEO, Christian Sewing, is hoping to put all these problems behind by returning the bank to its roots: financing German business. But it may be too late for that:
"From corporate giants to specialist engineering firms, Germany Inc.’s once-solid allegiance to Deutsche Bank is waning after years of crises stemming from efforts to emulate Wall Street investment banks, according to discussions with numerous executives.
After working with Deutsche Bank for more than half a century, “I feel genuine regret for the decline of this once so proud and trusted institution,” said Reinhold Wuerth, the 83-year-old billionaire and patriarch of building-materials maker Wuerth Group. But those woes “hardly influence our business, as there are all kinds of banking services available in the European Union,” said Wuerth, an elder statesman of the country’s vaunted Mittelstand of small- and medium-sized companies, which make up the backbone of the economy."
So the mighty DB can't even compete with 3rd-tier Italian lenders. Oh the humiliation!
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