Banking: Deutsche Bank’s worldwide retreat
Black Monday arrived at Deutsche Bank’s offices around the globe this week as the “German lending giant began one of the largest rounds of layoffs since the financial crisis,” said Thomas Franck in CNBC.com. Since the late 1990s, Deutsche Bank has tried to go toe to toe with the dominant American investment banks. But in recent years the bank has been “pummeled by scandals,” and the weight of investigations and massive fines—including a $7.2 billion settlement with the Justice Department in 2017 for deceptive practices dating back to the 2008 financial crisis—all forced Deutsche Bank to finally swing a heavy ax.
The bank had been trying to “play in the same league as Goldman Sachs or JP Morgan Chase” ever since acquiring Bankers Trust in 1999, said Jack Ewing in The New York Times. But it did so by taking hazardous, and sometimes criminal, chances, such as issuing huge sums of high-risk derivatives, “rigging interest rates, laundering money, and violating U.S. sanctions against countries like Iran.” Deutsche Bank’s “appetite for risk” was exemplified by its relationship with the Trump Organization, to which it lent billions “long after other lenders concluded that the risk was too great.” Now its only hope for a turnaround is to pare back its ambitions. ■