WEBVTT - Surveillance: Deutsche Bank Cuts, Restructures 0:00:00.080 --> 0:00:13.800 Ye. Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane Jaily. 0:00:13.960 --> 0:00:17.560 We bring you insight from the best in economics, finance, investment, 0:00:18.000 --> 0:00:23.480 and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 0:00:23.600 --> 0:00:29.440 Bloomberg dot Com, and of course on the Bloomberg. This 0:00:29.720 --> 0:00:33.440 is the interview of the day on Deutsche Bank and John. 0:00:33.479 --> 0:00:35.760 I say that because we go to the bond market 0:00:36.440 --> 0:00:39.839 and all of the debt dynamics of any bank in 0:00:39.880 --> 0:00:42.720 any bank has a ton of debt. Filippo already with 0:00:42.800 --> 0:00:47.760 their messes with us UH today their senior credit analyst, Filippo, 0:00:47.800 --> 0:00:51.120 when you sort out the glide pass of all of 0:00:51.159 --> 0:00:56.600 these dynamics, particularly over time out to two thousand twenty two, 0:00:57.160 --> 0:01:00.440 what's your enthusiasm for this set of a now expends? 0:01:00.920 --> 0:01:05.440 Can they do it? Yeah? Well, Tom, as you said correctly, 0:01:05.560 --> 0:01:08.399 it's it's quite interesting because this time and so it's 0:01:08.440 --> 0:01:12.280 a restructor who is not going to be financed by 0:01:12.319 --> 0:01:17.199 the shareholders, as you can expect given the thorough state 0:01:17.280 --> 0:01:20.720 of the where the equity of Dutch Bank is trading. 0:01:21.040 --> 0:01:24.680 This is it financed by internal resources. Essentially is financed 0:01:24.720 --> 0:01:30.600 by reducing the capital capital target or the bank, and 0:01:30.640 --> 0:01:33.200 I think it's the idea of DOTCH. A bank is 0:01:33.240 --> 0:01:36.560 to go to the regulator and say, listener with the 0:01:36.680 --> 0:01:38.960 risk in the balance sheet of the of the group 0:01:39.400 --> 0:01:42.320 and the four So we think if you can execute 0:01:42.360 --> 0:01:45.640 on that strategy, then we're gonna bud less of a 0:01:45.720 --> 0:01:50.120 problem to you and before we can lower the capital target. 0:01:50.560 --> 0:01:53.840 I think it's a little bit of an ambitious plan. 0:01:54.400 --> 0:01:58.040 But the least we can say that the measurement has 0:01:58.120 --> 0:02:02.120 listened to the Sharold because Charolder one anyday a the 0:02:02.160 --> 0:02:07.480 bank to undergo a regime to reduce the balance sheet 0:02:07.520 --> 0:02:09.600 at the same time not to tap the shelder because 0:02:09.880 --> 0:02:14.120 such a banquet as raised thirty billion euros in twenty ten. Well, 0:02:14.160 --> 0:02:16.600 let's talk about how likely that is. How do you 0:02:16.680 --> 0:02:19.440 fund the bill which is seven point four billion euros 0:02:19.440 --> 0:02:22.560 by twenty two that's the restructuring bill FELLI for as 0:02:22.600 --> 0:02:25.880 you know, with internal resources alone. What's your judgment called 0:02:25.880 --> 0:02:29.359 this morning? Do you think that's achievable? UM? I think 0:02:29.480 --> 0:02:31.200 so yeah. If you look at the seven point four 0:02:31.200 --> 0:02:33.920 billion is actually only five point four because that's all 0:02:33.960 --> 0:02:36.880 in termo car because there is an element of right 0:02:36.960 --> 0:02:39.799 down on the decade the fair taxas set but without 0:02:39.919 --> 0:02:43.160 going to match into the technicalities. I think it's of 0:02:43.160 --> 0:02:45.200 course also they're not going to pay dividend for the 0:02:45.240 --> 0:02:52.000 full year twenty twenty nineteen and twenty twenty. They reducing 0:02:52.040 --> 0:02:54.959 effectively the city one ratio by more than under a 0:02:54.960 --> 0:02:57.880 business point because it was thirteen point seven now they 0:02:58.600 --> 0:03:01.799 acknowledge will go as as twelve point five billion. I 0:03:01.800 --> 0:03:04.840 think that's the most important things is that there won't 0:03:04.840 --> 0:03:10.880 be any say, attrition from the on the revenue side, 0:03:10.880 --> 0:03:13.720 because it's good to control the cost base. That they 0:03:13.720 --> 0:03:16.680 want to reduce the cost base by six billion by 0:03:16.000 --> 0:03:22.840 two But of course so these uh discount a not 0:03:23.120 --> 0:03:26.160 a material deteriation on the revenue on the revision side 0:03:26.160 --> 0:03:27.880 of the basiness, which of course it is difficult when 0:03:27.919 --> 0:03:31.280 you're closing all the equity business outside. Yeah, it's the 0:03:31.280 --> 0:03:34.760 difficulty with this bank has always over the last five, six, nine, 0:03:34.800 --> 0:03:38.440 maybe even ten years, was the self fulfilling spiral downwards 0:03:38.440 --> 0:03:41.280 that they try and retrench, but then the revenue growth 0:03:41.360 --> 0:03:44.480 never comes and we just chase everything lower. Can we 0:03:44.560 --> 0:03:49.880 cut that death spiral with this turnaround plan. I think 0:03:50.000 --> 0:03:53.000 it's a possibility. I think that's all we have to 0:03:53.040 --> 0:03:55.640 say that the recognized to the to the new measurement 0:03:55.720 --> 0:03:59.640 that finned that. So they put in the awards where 0:03:59.680 --> 0:04:03.000 the the mounts and I mean they attempting this, uh, 0:04:03.120 --> 0:04:06.480 them backing very this and very ambition restructurally. It's a 0:04:07.080 --> 0:04:10.560 very rough with the first one and probably fifteen years 0:04:10.600 --> 0:04:14.280 that a bank is undergoing such a deep restructurally, and 0:04:14.320 --> 0:04:16.920 I think it's uh, it's probably the way to go 0:04:17.000 --> 0:04:21.360 for them. And time we tell whether they can achieve 0:04:21.400 --> 0:04:25.480 the starget. Let's let's um step back and they ask 0:04:25.560 --> 0:04:27.440 what is it in the bad bank? I mean, you've 0:04:27.480 --> 0:04:32.000 got a wonderfully detailed note Filippo. Do do we really 0:04:32.040 --> 0:04:35.919 know what's in the bad bank? Can we actually price it? Now? 0:04:38.240 --> 0:04:40.200 That's a very good question. Actually it is quite key 0:04:40.279 --> 0:04:43.960 or the afternoon strategy up in the management dissolving with 0:04:44.080 --> 0:04:47.320 investor on the world. I think I saw it's allowed 0:04:47.400 --> 0:04:50.640 in this so called bad bank seventy four billion or 0:04:50.640 --> 0:04:52.719 our w A and I think that saw a lot 0:04:52.880 --> 0:04:57.160 is linked to the UM so some equity derivative, there 0:04:57.279 --> 0:05:00.839 is some long term there. It is also there is 0:05:00.839 --> 0:05:04.120 something which is called operational risk, which is something that's 0:05:04.160 --> 0:05:07.360 what they can as long as the regulator is in favor, 0:05:07.400 --> 0:05:11.760 they can shed relatively easily, but we don't know the 0:05:11.920 --> 0:05:16.120 displte between say, sale and run down of the stuff 0:05:16.120 --> 0:05:18.960 in the bad bank. And what's interesting, folks, through all 0:05:19.000 --> 0:05:21.040 of the starting when the press release I believe it 0:05:21.080 --> 0:05:26.320 was on Saturday, and on and on, what's interesting to me, Filippo, 0:05:26.640 --> 0:05:29.839 is how the regulators fit into this, how the government 0:05:29.920 --> 0:05:33.480 of Germany fits into this. Am I wrong to say 0:05:33.600 --> 0:05:36.640 that Deutsche Bank is being run this morning by the 0:05:36.920 --> 0:05:42.120 you know, the general statement by the German government. Um, 0:05:42.160 --> 0:05:44.839 maybe I wouldn't go as far, but I think I 0:05:44.960 --> 0:05:47.760 see the sense of your question and it is fair. 0:05:47.839 --> 0:05:51.480 I mean that Dutch Bank is the largest financial group 0:05:51.480 --> 0:05:55.040 in Germany, and you would say the German government and 0:05:55.160 --> 0:05:57.520 also the central Bank, the European center Bank, they do 0:05:57.560 --> 0:06:00.200 at a stake in this aubidity of the institution. So 0:06:00.200 --> 0:06:02.360 I think that's what their point of view is, that 0:06:02.440 --> 0:06:05.280 so they make sure that the bank is solid enough 0:06:05.640 --> 0:06:09.600 to withstand even choppy waters. And I think this measurement 0:06:09.680 --> 0:06:13.520 plan attempt to go in that direction to make dodger 0:06:13.560 --> 0:06:17.200 banker's or leaner but maybe more solid. Philippa, do you 0:06:17.200 --> 0:06:21.000 see this plan is quite a positive this morning. Um, 0:06:21.240 --> 0:06:22.760 I'm a little bit on the fense in the sense, 0:06:23.000 --> 0:06:25.200 of course, for for that to be in very great 0:06:25.279 --> 0:06:28.440 positive would have involved a capital raise. But of course 0:06:28.440 --> 0:06:31.240 that's so. I'm aware that since the bank has raised 0:06:31.240 --> 0:06:33.640 so much money thirty billion over the last nine years, 0:06:34.320 --> 0:06:36.520 it's actually quite tough to go back to the Shilder 0:06:36.680 --> 0:06:39.000 say would you mind stamping it? I don't know. I 0:06:39.000 --> 0:06:41.359 don't know another five six billion eur in order to 0:06:42.120 --> 0:06:46.400 found this restruction. I think that's so something got a given. 0:06:46.400 --> 0:06:48.919 And in the sense that so is the reduction on 0:06:49.000 --> 0:06:51.920 the city one Racio Dodger Bank. I would love give 0:06:51.960 --> 0:06:55.719 you on the regional strategy here as well, focusing on Germany, Philippa. 0:06:55.839 --> 0:06:58.240 Focusing on Germany. It's not a good or a bad 0:06:58.279 --> 0:07:03.159 thing right now, Well conjunctory is maybe it's not a 0:07:03.200 --> 0:07:05.159 great thing. So, because that's what we know. The German 0:07:05.200 --> 0:07:07.680 economy is in slowdown. But at the same time, so 0:07:07.800 --> 0:07:11.640 you would think that the the German economy needs a 0:07:11.640 --> 0:07:14.120 strong bank. They wouldn't make the case of forces or 0:07:14.880 --> 0:07:17.080 lots of the world street bankers or the government, the 0:07:17.240 --> 0:07:19.600 dripping Morga and the Bank of America. The well, very 0:07:19.600 --> 0:07:23.280 well established in Germany. But I think as the Germans perceived, 0:07:23.320 --> 0:07:28.400 they do need a so called national champions one able 0:07:28.440 --> 0:07:33.440 to accompany the say the large German export around the world. Okay, exactly, 0:07:33.480 --> 0:07:38.600 but the John's good question to those people need sophisticated 0:07:38.840 --> 0:07:42.840 or less than sophisticated fixed income strategies. I mean, all 0:07:42.840 --> 0:07:46.480 they want to do is affect commercial transactions in same Malaysia, 0:07:46.680 --> 0:07:51.160 right yeah, I think so, yeah, there is an element 0:07:51.160 --> 0:07:53.840 of that. So they want to be also the bank 0:07:53.960 --> 0:07:58.200 to be able to accompany them, saying trades in ants program, 0:07:58.280 --> 0:08:00.040 they want to build I don't know, a factory in 0:08:00.280 --> 0:08:04.480 Southeast Asia, or they want to finance a the acquisition, say, 0:08:04.520 --> 0:08:08.760 for example, of a manufacturer in Brazil by a Japanese 0:08:08.800 --> 0:08:13.320 company or German investments, I don't know. In Canada, I 0:08:13.320 --> 0:08:16.240 think so they the German you have to think they're 0:08:16.360 --> 0:08:21.960 very conservative nature and they like to have a bank 0:08:22.040 --> 0:08:24.920 to speak the same language. Philippa's I mean in London 0:08:24.960 --> 0:08:27.239 and New York is maybe maybe a bit more difficult 0:08:27.240 --> 0:08:30.400 to or understand, but I think it's very peculiar to 0:08:30.440 --> 0:08:34.199 the German nature. Right. This has been wonderful, Philippa, al already, 0:08:34.240 --> 0:08:52.400 thank you so much. We now get perspective after someone 0:08:52.440 --> 0:08:56.480 who's really worked seven last three or four days. Alison Williams, 0:08:56.480 --> 0:09:00.600 Publishing with Bloomberg Intelligence. Allison, what you say to the 0:09:00.640 --> 0:09:04.160 people down in Wall Street today with Deutsche Bank? I 0:09:04.200 --> 0:09:08.120 think that, uh, saving is made sort of the best 0:09:08.160 --> 0:09:10.880 of some bad choices, right, so there's really no good choices. 0:09:10.960 --> 0:09:13.720 You had to do something sort of big and bold. 0:09:13.840 --> 0:09:16.280 I do think, you know, there's a lot of talk 0:09:16.320 --> 0:09:19.480 about exiting the US, not having a US, but the 0:09:19.520 --> 0:09:22.120 headlines don't say that. They don't because I think that 0:09:22.160 --> 0:09:24.840 would have been a mistake. So, you know, instead of 0:09:25.000 --> 0:09:27.680 editing a region, they're exiting a product. The question for 0:09:27.760 --> 0:09:30.760 US remains, you know, they're going to keep some business there. 0:09:30.760 --> 0:09:33.079 How big is what they're keying exactly? Why is it 0:09:33.160 --> 0:09:35.640 stock down this morning? I mean we had the pop. 0:09:35.720 --> 0:09:37.960 I mean you bought you bought it? What three am, John? 0:09:38.160 --> 0:09:41.240 Keep me out of this, you know, but you bought 0:09:41.320 --> 0:09:43.520 the pop and we're it's not pretty The stock price 0:09:43.600 --> 0:09:47.319 is not pretty. Well, I think it's two things. Um, 0:09:47.360 --> 0:09:50.040 you know, well, I guess it really it's one thing. 0:09:50.080 --> 0:09:53.040 The bottom line is the fact that, um, you know, 0:09:53.120 --> 0:09:57.560 this is sort of the one of many plans that's 0:09:57.559 --> 0:10:00.720 come out. Yes, it's a bigger, broader plan, but I 0:10:00.760 --> 0:10:03.720 think that it requires patients and it will take time. 0:10:03.840 --> 0:10:07.320 And I think it's very positive that they put this 0:10:07.360 --> 0:10:11.280 plan together, um, which should avoid a capital raise. But 0:10:11.320 --> 0:10:15.160 I think that there's probably um, you know, perhaps a 0:10:15.600 --> 0:10:18.640 lack of confidence in that, and that concern is going 0:10:18.679 --> 0:10:22.199 to linger for a while, just given the past history. 0:10:22.280 --> 0:10:26.240 What's the best news of the morning? A Torso just 0:10:26.360 --> 0:10:29.520 purtably no Torsten slut just published at Deutsche Bank. We 0:10:29.640 --> 0:10:32.120 like the fantastic news for Torsten Slack, and I hope 0:10:32.160 --> 0:10:35.080 it stays that way because we all enjoyed reading this research. Alison, 0:10:35.120 --> 0:10:38.040 outside of avoiding a capital race, what are the positives 0:10:38.120 --> 0:10:42.200 for shareholders this morning? I think the positives are that 0:10:42.600 --> 0:10:47.840 again it's a big change. Um, the cost targets, the 0:10:47.880 --> 0:10:51.440 profitability targets are all reasonable, so I think, you know, 0:10:51.520 --> 0:10:54.760 they're they're not heroic if you compare them to competitors. 0:10:55.320 --> 0:10:57.640 You know, however, you know, given where Deutsche Bank is, 0:10:57.679 --> 0:11:00.520 it still is sort of a tough slot. And that's 0:11:00.520 --> 0:11:05.400 why you know, we talked about you know, more patients required. Um, 0:11:05.440 --> 0:11:06.920 you know, I think it's been a show me story 0:11:06.960 --> 0:11:09.680 for a long time. The key concern for us is really, 0:11:10.120 --> 0:11:12.360 you know, you're exiting equities, you're focusing on the things 0:11:12.360 --> 0:11:14.480 that you're good at, But how about big do you 0:11:14.480 --> 0:11:16.439 have to be in equities to sort of keep a 0:11:16.520 --> 0:11:21.080 presence and not hurt your competitive positions? And there's adjacent businesses, 0:11:21.559 --> 0:11:25.040 you know, researches is an area UM that they've said 0:11:25.040 --> 0:11:28.480 that they're gonna stay in, so equity research, MAC research. 0:11:28.520 --> 0:11:31.080 They're going to keep enough of an equities effort to 0:11:31.120 --> 0:11:34.600 support M and A, to support equity underwriting. Um So 0:11:34.640 --> 0:11:36.920 how big is that and and can they still be 0:11:37.559 --> 0:11:40.200 UM successful on that smaller scale? The stock is down 0:11:40.240 --> 0:11:43.199 four percent the lows for the session. We've rolled over 0:11:43.200 --> 0:11:45.840 in the last couple of minutes. Again, the headlines that 0:11:45.880 --> 0:11:51.080 I keep reading is radical change, radical restructuring, eighteen thousand jobs, 0:11:51.080 --> 0:11:53.959 and it certainly sounds radical. Is this radical enough for 0:11:54.000 --> 0:11:56.760 Deutsche Bank? Kallison? I think we need to have more 0:11:56.880 --> 0:11:59.720 details in terms of where the eighteen thousand is coming from. 0:11:59.760 --> 0:12:01.960 And I should flag the fact that they started a 0:12:02.000 --> 0:12:05.000 presentation at eight am, so I'm not sure um if 0:12:05.000 --> 0:12:08.080 there was something said early in the call. UM. I 0:12:08.120 --> 0:12:10.600 know that there was a media call earlier where there 0:12:10.600 --> 0:12:12.520 were a lot of questions about where the eighteen thousand's 0:12:12.559 --> 0:12:15.000 going to come from. You know, management is not giving 0:12:15.040 --> 0:12:17.319 detail on that. I think the fact that they're not 0:12:17.400 --> 0:12:19.880 giving detail, the fact that they outlined one point four 0:12:19.920 --> 0:12:23.080 million of costs in the private bank signals that some 0:12:23.200 --> 0:12:25.280 of those could be coming from retail, some could be 0:12:25.320 --> 0:12:28.320 coming from Germany. Why did they decide to not do 0:12:28.360 --> 0:12:32.040 a cash call? It was that dictated to them by 0:12:32.360 --> 0:12:35.840 large shareholders, was a dictated to them by the German government. 0:12:36.800 --> 0:12:41.439 I think that they, obviously for their shareholders, want to 0:12:41.480 --> 0:12:43.800 avoid this cash call. They are cutting the dividends, so 0:12:43.840 --> 0:12:46.959 there is some pain to shareholders. But there definitely are 0:12:47.040 --> 0:12:51.480 some smart money investors in this company, some former bank managements. 0:12:51.480 --> 0:12:55.720 Presumably any company UM where you're going through such a 0:12:55.760 --> 0:12:59.679 big change, UM would would talk to your major shareholders 0:12:59.679 --> 0:13:02.280 and think about how they how they think about Well, 0:13:02.480 --> 0:13:04.000 I just want to explore this a little bit further 0:13:04.040 --> 0:13:05.920 with you, just to wrap up the conversation, Alison. I 0:13:05.920 --> 0:13:08.240 do wonder whether this narrative starts to take hold that 0:13:08.360 --> 0:13:11.840 the profitability targets are bold, the restructuring costs is so 0:13:11.920 --> 0:13:13.960 high that yes, they may say we don't need a 0:13:13.960 --> 0:13:15.920 cash call now, but I wonder whether the market is 0:13:15.960 --> 0:13:18.199 making an assumption now that they won't be able to 0:13:18.240 --> 0:13:21.200 avoid one because of those reasons. I think the market 0:13:21.360 --> 0:13:24.240 is sort of telling you that or and that seems 0:13:24.280 --> 0:13:26.720 to be with the sock is signaling I think, because 0:13:27.320 --> 0:13:29.400 you know, a bank can can say all day long 0:13:29.440 --> 0:13:32.760 they don't need capital, but given past history, UM, you know, 0:13:32.840 --> 0:13:36.240 with banks, with this company in particular. Also, we don't 0:13:36.240 --> 0:13:38.280 know about the environment, so there's still a lot of 0:13:38.360 --> 0:13:41.280 environmental risks out there. And I think that UM would 0:13:41.320 --> 0:13:44.240 be my concern as an investor UM. And you know, 0:13:44.400 --> 0:13:47.800 let's give it some time and see how things UM 0:13:47.840 --> 0:13:51.160 play out. Alison Wilson Williams, thank you so much, greatly, 0:13:51.160 --> 0:14:07.480 greatly appreciate. It has been an extraordinary day and we 0:14:07.559 --> 0:14:11.360 see that now with further erosion in Deutsche Bank. Let 0:14:11.360 --> 0:14:14.840 me get up the chart here right now, because it's 0:14:14.920 --> 0:14:18.520 not a pretty chart. We can describe an eight percent 0:14:19.000 --> 0:14:21.880 moved down from the peak this morning seven point four 0:14:22.040 --> 0:14:25.040 eight ish seven point four nine and the peak that 0:14:25.080 --> 0:14:28.120 was in the three am hour, and now we break 0:14:28.160 --> 0:14:31.240 down to new lows moments ago. Marcus ashworths with us, 0:14:31.720 --> 0:14:34.880 maybe with a good summary after talking to bond experts, 0:14:34.880 --> 0:14:38.320 that airms, if talking to Allison Williams, the equity and 0:14:38.360 --> 0:14:42.040 the strategic fundamentals, let's talk about the human condition of this. 0:14:42.200 --> 0:14:44.640 We can do this with Mr Ashworth with years and 0:14:44.720 --> 0:14:49.000 years on Global Wall Street. What a miserable day, Marcus 0:14:49.040 --> 0:14:52.680 for eighteen thousand plus at Deutsche Bank. Indeed it is 0:14:52.800 --> 0:14:54.840 it's been a long time coming on. In essence, what 0:14:54.960 --> 0:15:00.120 we're seeing here is international Messem banking employees being like, oh, 0:15:00.160 --> 0:15:04.320 though some will be transferred to other firms, possibly um 0:15:04.360 --> 0:15:07.480 at the expense of domestic German retail employees, which is 0:15:07.520 --> 0:15:10.760 what would have happened or more of if the Comments 0:15:10.800 --> 0:15:14.200 bank um merger had come through. But you know, Deutsche 0:15:14.280 --> 0:15:17.120 has kept too many options open for too long. It's 0:15:17.160 --> 0:15:19.080 not going to be in filman sacks of Europe and 0:15:18.960 --> 0:15:22.400 it had finally to take the domestic and go back 0:15:22.440 --> 0:15:24.720 to be a bank rather than investment bank. Let's take 0:15:24.760 --> 0:15:27.960 a broader conversation the people that will be looking for jobs. 0:15:28.040 --> 0:15:31.200 What's the state of Global Wall Street right now? And 0:15:31.240 --> 0:15:35.680 particularly the state of your London. I have to say, um, 0:15:36.160 --> 0:15:38.520 obviously there's a Brexit element to it, though I don't 0:15:38.560 --> 0:15:41.880 think that's anything near as important as Meford two. And 0:15:42.000 --> 0:15:47.160 indeed the whole robotic AI switched to doing UH finance 0:15:47.240 --> 0:15:49.480 and in a in a more efficient manner and with 0:15:49.680 --> 0:15:53.359 less body count. And I think that this is a 0:15:53.360 --> 0:15:58.040 another big crunch akin to the global financial crisis for 0:15:58.040 --> 0:16:00.640 for for employees around the world and investment banking, because 0:16:00.640 --> 0:16:03.240 there simply isn't any money to be made in a 0:16:03.280 --> 0:16:06.760 negative rate environment. That Feds cutting rates as well, so 0:16:07.280 --> 0:16:10.000 we've got no upside and people do not pay for 0:16:10.240 --> 0:16:12.720 trading stocks. I mean, I mean you, and in folks, 0:16:12.760 --> 0:16:15.440 I should say that if you read Marcus Ashworth and 0:16:15.520 --> 0:16:21.280 Bloomberg opinion, it's extremely visceral writing about the moment. In 0:16:21.360 --> 0:16:24.320 the moment of the last two weeks into this Deutsche 0:16:24.360 --> 0:16:30.560 Bank announcement, Marcus is price up, yield down, and they 0:16:30.640 --> 0:16:32.680 keep buying. I keep telling people this is not a 0:16:32.720 --> 0:16:38.120 yield analysis, it's a price analysis. The desperation to own paper, 0:16:38.240 --> 0:16:41.880 What is the why of the desperation to own notes, 0:16:41.920 --> 0:16:45.560 bills and barns. It's simply because you have an index, 0:16:45.640 --> 0:16:47.880 or a lot of people have indexes to perform regardless 0:16:47.920 --> 0:16:49.560 in some senses. If you can see it's going one 0:16:49.560 --> 0:16:51.440 way traffic, you have to be part of it, and 0:16:51.520 --> 0:16:54.560 that's hold your close your eyes, hold your nose, whatever 0:16:54.600 --> 0:16:56.920 is and buy. Because in essence, this is going to 0:16:57.000 --> 0:16:59.480 be a terrible year for people after possibly a bad 0:16:59.560 --> 0:17:03.720 twenty team in certain ways and getting caught out in 0:17:03.680 --> 0:17:06.040 particularly the bond markets by not being long enough stock 0:17:06.440 --> 0:17:08.920 or long enough of maturity. Is is going to hurt 0:17:08.920 --> 0:17:12.880 you badly. What is your understanding of if Deutsche Bank 0:17:13.040 --> 0:17:16.760 slims and trims in New York and London and everywhere else, 0:17:17.280 --> 0:17:19.959 they're going to be quote a German bank, what does 0:17:20.000 --> 0:17:22.960 that mean to Marcus Ashworth? What it means that they 0:17:23.040 --> 0:17:25.560 were once seen, obviously is for many years as the 0:17:25.600 --> 0:17:30.360 titan of German corporate um industry, and not that where 0:17:30.359 --> 0:17:34.040 perhaps as where Comets Bank has maintained it's it's it's reputation. 0:17:34.320 --> 0:17:36.960 Deutsche Bank then went outside around the world and tried 0:17:36.960 --> 0:17:39.560 to take on Wall Street, and it very nearly succeeded. 0:17:39.560 --> 0:17:42.200 In fact, you could argue succeeded brilliantly for many years. 0:17:42.240 --> 0:17:46.120 But the domestic business is something which they obviously feel 0:17:46.119 --> 0:17:48.239 they can make still make good money on on on 0:17:49.320 --> 0:17:53.679 deploying capital into using the weight of German industry and 0:17:53.680 --> 0:17:55.800 the weight of German banking and combine it together as 0:17:55.800 --> 0:17:58.080 a powerhouse of Europe. And that's what they are. They're 0:17:58.080 --> 0:18:00.400 a powerhouse of Europe Germany, and they need a bank 0:18:00.440 --> 0:18:02.200 to reflect it. And they've not had it. They've had 0:18:02.200 --> 0:18:06.080 a underperforming um not quite up to bulge back at 0:18:06.080 --> 0:18:08.919 status US investment Bank. And then there's that little article 0:18:09.040 --> 0:18:12.080 Marcus of BMP Perry bar making clear they're going to 0:18:12.160 --> 0:18:15.520 go after their prime brokerage, their hedge funds, servicing business 0:18:15.960 --> 0:18:18.280 as well. I mean, on a game theory basis, everyone 0:18:18.359 --> 0:18:21.520 in continental Europe un credit BMP Perry, but all of 0:18:21.560 --> 0:18:25.160 them Commerce bank. They all react to this news. What 0:18:25.240 --> 0:18:30.200 kind of meetings are they having today? Is their adversaries struggles. Well, 0:18:30.240 --> 0:18:32.119 I think you'll find that that some of the Deutsche 0:18:32.160 --> 0:18:34.360 businesses will switch to BMP in the sense so much 0:18:34.480 --> 0:18:36.080 how they're going to be sold or what they're gonna 0:18:36.080 --> 0:18:38.399 get from the point is is that Deutsche Bank is 0:18:38.440 --> 0:18:41.119 making a clear statement here. It fell in love with 0:18:41.119 --> 0:18:43.639 the hedge fund, it fell in love with America, and 0:18:43.680 --> 0:18:47.080 they are moving away from both of those types of business. 0:18:47.359 --> 0:18:49.960 It's become a much more of a corporate bank, focusing 0:18:49.960 --> 0:18:53.480 on European and and it's it's industrial strengths and moving 0:18:53.480 --> 0:18:59.000 away from hedge fund clients. Those people stay with Deutsche 0:18:59.080 --> 0:19:03.600 Bank or continue a part of their business or marginally 0:19:03.880 --> 0:19:08.200 add business with Deutsche Bank out of national duty. Yeah, 0:19:08.240 --> 0:19:09.760 of course they do, and I think I think some 0:19:09.880 --> 0:19:12.920 will increasingly if they feel that they're being loved, whereas 0:19:12.960 --> 0:19:15.320 perhaps they may be ignored. And I think that there 0:19:15.320 --> 0:19:19.120 will be more emphasis on trying to unify a European 0:19:19.160 --> 0:19:22.840 banking presence, which is overall in a pretty poor states 0:19:22.960 --> 0:19:25.800 as it happens. Basically, they couldn't make any money trying 0:19:25.800 --> 0:19:28.119 to sell stocks to hedge funds and that that that 0:19:28.240 --> 0:19:29.840 is a very simplistic way of putting it. But there's 0:19:29.840 --> 0:19:32.080 no money in stocks anymore. You don't get charge any 0:19:32.080 --> 0:19:34.520 brokerage for it. There's not They're not getting enough m 0:19:34.520 --> 0:19:37.600 and a business to to justify having the secondary presence. 0:19:37.800 --> 0:19:40.960 And they can probably do a lot of this anyway 0:19:41.040 --> 0:19:43.399 regardless without having about a massive equise union. That's the 0:19:43.400 --> 0:19:45.480 whole point. They can dip in and dip out, and 0:19:45.520 --> 0:19:47.679 some of their captive corporate clients will do business with 0:19:47.680 --> 0:19:51.480 them regardless. Tell me about the asset management, Marcus, you 0:19:51.520 --> 0:19:53.720 and I had a conversation X months ago. They were 0:19:53.720 --> 0:19:56.160 going to sell the Crown Jewel. That didn't work out. 0:19:56.200 --> 0:20:00.920 They couldn't get the price, and now their trumpet in DWS. 0:20:01.000 --> 0:20:04.359 Their asset management business is the future. But do you 0:20:04.440 --> 0:20:08.720 see active management as a future right now for anyone? Well, 0:20:08.720 --> 0:20:10.399 I think what they're trying to do is less than 0:20:10.400 --> 0:20:12.119 the pain of the fact they're moving out the invest 0:20:12.119 --> 0:20:14.600 in banking side to to such a large degree, in 0:20:14.600 --> 0:20:17.199 particularly obviously focused that I would be on equity that 0:20:17.200 --> 0:20:19.920 they're trying to emphasize they are still a broad brace bank. 0:20:20.000 --> 0:20:23.080 They have private wealth management to have asset management because 0:20:23.080 --> 0:20:24.879 they did have to raise some money from DWS. But 0:20:24.920 --> 0:20:27.520 the point is that DUS is worth more to than 0:20:27.520 --> 0:20:30.280 the moment in house, and they're emphasizing the fact it 0:20:30.359 --> 0:20:33.040 has these managed to grow some assets. So it's you know, 0:20:33.040 --> 0:20:34.879 asset managed being a terrible business to be in for 0:20:34.880 --> 0:20:37.000 the last two three years. Going to suffer from that, 0:20:37.160 --> 0:20:39.959 but at the moment, relatively speaking, it looks better than 0:20:39.960 --> 0:20:43.359 the others. Tell me about your London. Let's finish up 0:20:43.400 --> 0:20:45.760 here in Marcus, with the city. I mean it is 0:20:45.800 --> 0:20:49.320 the wall, it is historic. Full disclosure, folks. I've been 0:20:49.359 --> 0:20:52.520 a guest of Deutsche Bank a number of times in London. 0:20:53.119 --> 0:20:57.520 Is Well, we're talking to Shinelli Basak about downtown New York, 0:20:58.240 --> 0:21:02.080 downtown Manhattan and the sadness that will be there today. 0:21:03.040 --> 0:21:06.119 How does that work culturally in London? How do they 0:21:06.480 --> 0:21:10.200 handle the layoffs at the Wall? Well, I mean, it's 0:21:10.240 --> 0:21:13.000 going to be a difficult day for many. Um. I 0:21:13.119 --> 0:21:15.399 think that we know that this is going to be 0:21:15.480 --> 0:21:18.040 a process which like when Lehman Brothers, will be a 0:21:18.080 --> 0:21:20.760 lot of media attentions are focused on and I think 0:21:20.840 --> 0:21:23.600 you'll find that will be a good a good effort 0:21:23.640 --> 0:21:25.040 done by a lot of head hunters to try and 0:21:25.119 --> 0:21:27.639 get the best, the cream of the crop. So for 0:21:27.720 --> 0:21:29.880 some people this will be it will be relief. There'd 0:21:29.920 --> 0:21:31.960 be probably not been joying the life of some while, 0:21:32.200 --> 0:21:33.560 and there'll be a lot of tension on trying to 0:21:33.600 --> 0:21:36.399 grab the best out of Deutsche Bank. So some some 0:21:36.600 --> 0:21:38.239 they'll this will be a good day. For some it's 0:21:38.280 --> 0:21:40.520 the end of a career. Interesting. Thank you so much, 0:21:40.760 --> 0:21:57.520 Marcus Ashworth. Great perspective there, Lisa rom woids here in 0:21:57.800 --> 0:22:01.520 for Paul Sweeney. The big question bond markets today is 0:22:02.080 --> 0:22:05.040 can U S yields go lower at a time when 0:22:05.040 --> 0:22:07.760 the U S economy seems to be pretty good? I mean, Tom, 0:22:08.040 --> 0:22:10.959 that seems to me the fundamental issue here. And uh, 0:22:11.359 --> 0:22:13.639 Christian Momany is going to give us a sense of 0:22:13.680 --> 0:22:16.680 what invest goo and Christian I think in dovetail in 0:22:16.800 --> 0:22:19.200 here the up down, the back of the fourth of 0:22:19.240 --> 0:22:21.399 the weekend. Christian, you're going on Monday morning, what do 0:22:21.480 --> 0:22:26.000 you do? You guys are long term? How casual are 0:22:26.040 --> 0:22:30.720 you on this Monday? Well, so we are not casual 0:22:30.800 --> 0:22:33.600 at all. This is investing and this is serious business. 0:22:33.720 --> 0:22:36.920 Having said that, one has to be somewhat amused with 0:22:37.840 --> 0:22:41.120 the gyrations that we have had so far so far 0:22:41.280 --> 0:22:44.560 this year. Our bottom line in this regard is very simple. 0:22:44.760 --> 0:22:47.480