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Strange


Total Posts: 1346
Joined: Jun 2004
 
Posted: 2016-10-05 03:56
"The Greek banks are still (just about) breathing, but DB is going to collapse in a heap a la Lehman. Seems like the way to bet..."

Where is the "like" button?

It's buy futures, sell futures, when there is no future!

chiral3
Founding Member

Total Posts: 4985
Joined: Mar 2004
 
Posted: 2016-10-05 15:12
DB is not going to collapse for any of the recent hype. I put my money behind this - I didn't novate a single position. In fact, I tried to trade more as they tried to buy business. However, I do not alter the views I've been stumping for years, which is that DB is fcuked. I've said this for more fundamental reasons. There's no vision - they are fractured and disparate businesses lacking any cohesion.

Nonius is Satoshi Nakamoto. 物の哀れ

Kitno


Total Posts: 340
Joined: Mar 2005
 
Posted: 2016-10-05 22:40
Despite feeling like I'm in a laager I actually agree with most of the comments.

DB's decline has been occurring for a long time. It's too diverse and management lacks the ability to address sufficient scope for investor confidence. I think we, in markets, know that inflating assets for 8 years isn't a solution but a temporary fix and we await the fall of the weak. Hence the obsessing on DB despite the likes of the Greek banks. I mean it's a bit like the oligopoly of CCPs as opposed a monopoly - sure not for today but at some point that will sting us. Time is coming soon for a couple of the formerly hubristic behemoth banks to go the way of the Dodo and the hunters scent their prey.

Turning it around: how does DB become a sustainable business (and yes there is a huge cost problem there) that you would wish your pension pot to invest in?

I am a big fan of Cheng's metric focus on RoA. I think this is an underrated metric of a bank compared to RoE for obvious leverage reasons.

Salut toi, je vais au Social Club avec des amis ce soir, c'est au 142 rue Montmartre. J'ai mis ta robe préférée. Viens me trouver.

drews


Total Posts: 284
Joined: Jun 2004
 
Posted: 2016-10-06 11:59
@ Kitno:"Turning it around: how does DB become a sustainable business (and yes there is a huge cost problem there)"

I don't think my view is non-trivial, but I think there's no "silver bullet" here, but for the management to increase profit and decrease cost. There're multiple ways to decrease cost (even though some will require an initial investment - e.g. improving IT systems). As to the profit I guess it's much harder, in HR-speak, it's probably "de-emphasizing" some of the more capital intensive businesses so that more capital can be put into more sustainable/less capital intensive ones. Again don't think what I said is not just a common sense...

@ chiral3 "However, I do not alter the views I've been stumping for years, which is that DB is fcuked. I've said this for more fundamental reasons. There's no vision - they are fractured and disparate businesses lacking any cohesion."

I've worked in a few banks over the years (probably too many :)) but isn't it the case for all of them?! They consist of separate businesses often with no "synergies" between them, but it seems quite natural to me (which overlaps are there e.g. between Equity Index Flow and Agency CMO desks?...). I'm sure it's easier to form a view dealing with them from the buyside (I just don't have a recent buyside experience for this perspective). I've heard few yrs ago HFs could still cross different desks of the same bank on some hybrid structures. E.g. for some Eq/IR hybrids traded by both Equities and FICC desks. Not sure if it's still possible these days, but my guess would be "no". Anyways, was just curious what are the concrete examples of DB being worse than others?

Cheng


Total Posts: 2818
Joined: Feb 2005
 
Posted: 2016-10-07 12:15
Anyways, was just curious what are the concrete examples of DB being worse than others?

Not sure whether their IT is "just as bad" as everyone else's or worse. From what I understood form the press it seems to be pretty bad but otoh... as long as we don't talk about mutual savings banks and the likes which have a centralized IT via their setup there are probably no outperformers.

Besides that I agree with the point about "natural no synergies" Smiley.

"He's man, he's a kid / Wanna bang with you / Headbanging man" (Grave Digger, Headbanging Man)

chiral3
Founding Member

Total Posts: 4985
Joined: Mar 2004
 
Posted: 2016-10-07 17:28
@Drew - I am on the buy-side and do a fcukton of size by any standard in almost every asset class with over 10 CPs. My concrete examples would be anecdotal comparisons based on trading and CP research. I will say that because I trade so many asset classes I have a view on how stovepiped they are, which is more than others. Also, when I talk to the senior people - group MD and higher - it's like who's on first. When I was on the sell-side there was more cohesion.

Nonius is Satoshi Nakamoto. 物の哀れ

Maggette


Total Posts: 941
Joined: Jun 2007
 
Posted: 2016-10-07 21:13
DB just canned me as a customer...they are doomed:):

Ich kam hierher und sah dich und deine Leute lächeln, und sagte mir: Maggette, scheiss auf den small talk, lass lieber deine Fäuste sprechen...

Rookie_Quant


Total Posts: 732
Joined: Jun 2004
 
Posted: 2016-10-08 16:16
Memory fails me, but were novations a big deal with LEH in terms of actual executions or did it just exacerbate the confidence narrative? Maybe what I'm asking is what is the marginal effect of novating a position vs the same sized counterparty being rumored to novate?


"These metaphors and similes aint similar to them, not at all." -Eminem

chiral3
Founding Member

Total Posts: 4985
Joined: Mar 2004
 
Posted: 2016-10-08 17:09
I'll speak for myself - With LEH I didn't novate and had to get in line. Many people have this memory so it becomes very popular amongst the Kool-Aid people to start yammering about novation right off the bat. With DB I said immediately that I had no desire to novate but you still need to pay homage to the Kool-Aid people's fragile egos and placate with idle threats.

Nonius is Satoshi Nakamoto. 物の哀れ

Martinghoul


Total Posts: 850
Joined: Oct 2008
 
Posted: 2016-10-08 18:23
We novated, or at least attempted to, and it was a pretty big deal to us (we had some relevant experience to draw on w/Bear)... To be fair, novations became a monumental pain for all of our dealer counterparties at that point. They all became exceedingly risk averse and difficult.

EDIT: to be sure, the above is in reference to Leh, not DoucheBank.

Insofar as I may be heard by anything, which may or may not care what I say, I ask, if it matters, that you be forgiven for anything you may have done or failed to do which requires forgiveness...

MadMax


Total Posts: 424
Joined: Feb 2006
 
Posted: 2016-10-08 18:37
About DB's IT systems: they are very poor and recently they outsourced infra to HP so I think their IT is basically bust.

tabris


Total Posts: 1244
Joined: Feb 2005
 
Posted: 2016-10-10 02:08
I think there are a decent number of folks, even though they have novated or moved collateral from DB, knows that this isn't a Leh type issue. The problem arises when the guys that are yammering away are guys that your investors hired to have that daily/weekly/monthly market update meeting and they ask about counterparty risk with DB...

Dilbert: Why does it seem as though I am the only honest guy on earth? Dogbert: Your type tends not to reproduce.

Martinghoul


Total Posts: 850
Joined: Oct 2008
 
Posted: 2016-10-12 17:48
So today DoucheBank agreed to pay $9.5mm to the SEC for not safeguarding material nonpublic information.
SEC vs DBSI

I am just curious whether anyone is aware of a banking activity which DB participated in and did NOT run afoul of rules and regulations. Inquiring minds want to know.

Insofar as I may be heard by anything, which may or may not care what I say, I ask, if it matters, that you be forgiven for anything you may have done or failed to do which requires forgiveness...

Cheng


Total Posts: 2818
Joined: Feb 2005
 
Posted: 2016-10-13 08:50
To be fair, I got the impression that goal posts have been moved in the meanwhile, i.e. what has been ok a couple of years ago is considered a mortal sin now. Fines make the world go round.

"He's man, he's a kid / Wanna bang with you / Headbanging man" (Grave Digger, Headbanging Man)

Martinghoul


Total Posts: 850
Joined: Oct 2008
 
Posted: 2016-10-13 11:13
@Cheng: true dat... Also, I would imagine there's probably a bit of a sense that DB is an easy target.

Insofar as I may be heard by anything, which may or may not care what I say, I ask, if it matters, that you be forgiven for anything you may have done or failed to do which requires forgiveness...

katastrofa


Total Posts: 357
Joined: Jul 2008
 
Posted: 2016-10-19 13:54
More importantly, they have agreed to scale down their US operations (leaving more money on the table for US banks).

Mission accomplished, SEC.

Martinghoul


Total Posts: 850
Joined: Oct 2008
 
Posted: 2016-10-26 17:17
Ah well... I suppose this shouldn't be anything to be excited about, at this point:
DB to review inflation swaps

Call it morbid fascination, if you will, but I can't help but marvel at this stuff.

Insofar as I may be heard by anything, which may or may not care what I say, I ask, if it matters, that you be forgiven for anything you may have done or failed to do which requires forgiveness...

chiral3
Founding Member

Total Posts: 4985
Joined: Mar 2004
 
Posted: 2016-10-26 17:26
Pricing challenges and reviews are SNAFU stuff. My guess is they are just reporting more on this stuff as it related to DB. Also note it's worth noting it is an unattributed source. For those of us that deal with reporters we know that they have hard-ons for being able to attribute their sources. When I speak on a attributable basis I am quoted 95% of the time. Maybe 5% of the time when I don't allow attribution. Sounds like someone is tipping BBG news to something that, under any other circumstance, wouldn't be reported on. Doesn't change the fact that DB is a fractured and unfocused mess.

Nonius is Satoshi Nakamoto. 物の哀れ

Martinghoul


Total Posts: 850
Joined: Oct 2008
 
Posted: 2016-10-26 19:03
I have some familiarity with the franchise in question. I did get a vague sense that something may have been amiss earlier this year, on the back of some personnel changes. Also, there have been a few notable recent accidents across banks' US inflation desks, which might serve as an indication.

As you say, though, it's all hearsay at this point.

Insofar as I may be heard by anything, which may or may not care what I say, I ask, if it matters, that you be forgiven for anything you may have done or failed to do which requires forgiveness...

katastrofa


Total Posts: 357
Joined: Jul 2008
 
Posted: 2016-10-27 10:21
In my personal experience, bank can be quite stubborn in using primitive and overly simplistic pricing models, if the skews the value of the book in the favour of Important People's Bonuses.
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