In 2016, after paying $ 17 billion in fines for misconduct over a decade, the vast bank seemed to have reached the point of no return. “The spirit of Lehman Brothers haunts Deutsche,” they wrote in The Wall Street Journal. “Deutsche Bank is the next Lehman Brothers: a low chance but not impossible,” the New York Times reported. “Deutsche is not Lehman, it is Bear Stearns,” he said cynically at CNBC, and in Forbes, “the market does not buy the bank as solid as a rock.”
The situation was so precarious that elements in the global political and economic arena toyed with the idea of calling for Germany to rescue the bank and the $ 1.8 trillion of assets it was running at the time. But Germany did not come to the rescue, and the bank ended 2016 with a colossal loss of $ 6.8 billion and with 8,000 different claims against it.
The largest bank in Germany, which in previous years was a European example of real banking mediocrity, was suddenly perceived as a global financial threat. He was accused of childishness, arrogance, unfocused aggressiveness, lack of talent and provincialism. The IMF awarded him the dubious title of “the most significant contributor to risks in the global banking system.”
Deutsche’s only way out of the cycle was through a massive efficiency program. Indeed, the bank launched aggressive cuts, fired 9% of the workforce – 9,000 employees and 6,500 external consultants – sold the Postbank retail arm, liquidated operations in 10 different countries, and announced a “cultural change” campaign to restore the bank to its German values .
The bank’s stock made slight signs of recovery, especially after HNA, a Chinese tourism corporation holding the airline, became the largest investor in the bank in 2017 with a 9.9 percent stake. However, in the end, the financial results were still negative, the bank’s image was still battered, and the ratio of operating efficiency (expenses to operating income) remained a threat and amounted to 93%. By comparison, JP Morgan’s operational efficiency ratio is 55%, Morgan Stanley’s 72%, Wells Fargo 64.4%, and the Israeli average 65%.
“No need to talk about strategy”
In April 2018, John Crane, the third chief executive of the bank, was sacked within five years: “We do not need to talk about strategy,” said bank chairman Paul Eclaitner shortly after announcing his dismissal. . This will not be the last time Echlitner will push questions about strategy to heretics.