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  • Though its name literally translates to German Bank, Deutsche Bank's reach can be felt

  • far beyond Europe's largest economy, across the world.

  • But now the lender, which once hoped to take on Wall Street's biggest players, is cutting back,

  • with one of the most dramatic banking overhauls we've seen since the financial crisis.

  • So what is Deutsche Bank? And how did we get here?

  • Deutsche Bank's story begins in Berlin in 1870, before Germany had even been established as a nation-state.

  • Founded by a group of private bankers, the purpose of Deutsche Bank was to facilitate trade

  • between Germany and the rest of the world, as well as challenge the dominance of British banks.

  • Deutsche Bank's early decades were marked by rapid expansion,

  • helping to develop Germany's electrical- engineering industry domestically,

  • while also financing business abroad like the Baghdad Railway.

  • Its operations soon covered Latin America, Asia and Africa, and in 1914,

  • theFrankfurter Zeitungnamed Deutsche Bankthe biggest bank in the world.”

  • However, that claim marked the end of an era, as the First World War forced Deutsche Bank

  • to focus on its business at home, merging with several regional banks.

  • World War II followed.

  • It was a dark period for Germany and Deutsche Bank was no exception,

  • complying with and sometimes benefiting from the discriminatory laws of the time.

  • "Nazi Germany was determined to flourish not by trading peacefully with its neighbors.

  • But by ruthless agression and conquest."

  • Deutsche Bank has since taken 'moral responsibility' for its actions and has contributed to the

  • $5.1 billion 'Remembrance, Responsibility and Future' fund created to compensate victims of the Nazis.

  • Following the war, Deutsche Bank was on the verge of ruin

  • and was temporarily split into several smaller banks for about a decade.

  • Then through the second half of the century, the company began to rebuild.

  • During this period, the bank benefited from the fall of the Berlin wall

  • and deregulation in Europe and the United States, where the free market was championed

  • "If you seek liberalization, tear down this wall."

  • By the late 1980s, it was the largest player in the German economy,

  • holding hefty stakes in most of the country's biggest corporations.

  • But Deutsche wanted more.

  • Wall Street names like JPMorgan, Goldman Sachs and Merrill Lynch were expanding aggressively

  • and Deutsche's leadership wanted to get in on the action.

  • In 1994, the German government picked Goldman, not Deutsche,

  • to take the lead on selling Deutsche Telekom, Europe's largest privatization to date.

  • Reports say this was a huge embarrassment for the CEO at the time and contributed to

  • the decision to reorganize as a global investment bank.

  • The firm acquired a number of major banks, including Morgan Grenfell in the U.K.,

  • Banco de Madrid in Spain and Bankers Trust in the U.S.

  • Deutsche Bank cemented its position as a major player on Wall Street and global banking in 2001,

  • when it floated on the New York Stock Exchange.

  • By mid-2007, the bank was valued at $81.3 billion and held $2.6 trillion in assets,

  • allowing Deutsche to claim the title of the world's biggest bank by assets.

  • But everything came to a grinding halt mere months after this peak.

  • That's of course when the global financial crisis happened.

  • Deutsche Bank's share price on the New York stock exchange rose to more than $120 in 2007.

  • By January 2009, it had tumbled to less than $20.

  • It's fallen even further since.

  • Deutsche Bank was actually commended for successfully weathering the crisis at the time,

  • but it was the regulatory crackdown in the aftermath that was the real test.

  • After the financial crisis, regulators forced banks to run their businesses with less debt.

  • Deutsche Bank was required to raise more than $30 billion in equity capital

  • over the 10 years following the financial crisis.

  • The bank is worth only about half of that today.

  • At the same time, the demand for its products shrank, profits dwindled and a number of scandals hit.

  • You see, Deutsche Bank's near-decade of rapid expansion

  • was focused on its investment banking division.

  • Its other arms, like its retail and corporate bank in Germany,

  • didn't get nearly as much financing and suffered as a result.

  • The bank paid new staffers much more than rival banks and handed out generous bonuses.

  • Compliance and risk management struggled to keep up with the breakneck growth.

  • That might explain the number of scandals, and subsequent fines, that followed.

  • They include a $7.2 billion settlement with the Department of Justice

  • for allegedly misleading investors into buying mortgage- backed securities leading up to the financial crisis

  • and $2.5 billion in fines to U.S. and U.K. regulators for participating in the so-called Libor scandal,

  • a scheme to rig interest rates.

  • It's also been slapped with hundreds of millions of dollars in penalties for allegations

  • of Russian money laundering and violating U.S. sanctions against Iran and other countries.

  • The bank has also come under scrutiny over its business relationship with U.S. President Donald Trump.

  • "Deutsche Bank's stock falling hard today after the bank's Frankfurt offices

  • were raided by almost 200 German police officers."

  • The most dramatic depiction of Deutsche Bank's troubles are likely these images from the end of 2018.

  • Deutsche Bank's offices were raided in connection to the investigation of two staff members

  • suspected of helping clients launder money.

  • Deutsche has gone to great lengths to turn the bank around.

  • It has had five CEOs since the end of the financial crisis.

  • "We see the progress but we are also aware that more needs to be done."

  • Christian Sewing, a Deutsche Bankliferwho took the helm in 2018,

  • is the latest tasked with getting the bank back on track.

  • The German CEO announced themost fundamental transformation of Deutsche Bank in decades.”

  • The transformation includes dramatically shrinking and reorganizing its investment bank

  • and completely exiting its global equities business.

  • As a result, Deutsche Bank will lose a fifth of its workforce by 2022

  • and will reduce adjusted costs by a quarter.

  • This is the fifth strategic plan from Deutsche in just seven years, but also the most striking.

  • These kinds of sweeping changes signify the end of the bank's ambitions

  • to compete with America's banking titans, at least for now.

  • But the goal here is increasing profitability

  • and hopefully returning Deutsche Bank to the stable lender it used to be.

  • Thank you so much for watching my story on Deutsche Bank, what has surprised you the most about this bank?

  • Comment below and don't forget to subscribe!

Though its name literally translates to German Bank, Deutsche Bank's reach can be felt

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ドイツ銀行とは?| CNBCが解説 (What is Deutsche Bank? | CNBC Explains)

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    Summer に公開 2021 年 01 月 14 日
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