On February 2, 2012, Deutsche Bank CEO Josef Ackermann will discuss the bank’s preliminary results for FY 2011. Ackermann will leave the bank in 2012—a year in which the World Bank projects a recession in the EU, an anemic recovery in the US, and reduced growth in emerging markets. Against the backdrop of a projected global economic slowdown, and in preparation for Dr. Ackermann’s comments, we have posed 12 questions that may continue to haunt Deut
sche Bank in 2012.
1. To what extent will Deutsche Bank be a source of ‘contagion’ spreading Europe’s banking crisis across the Atlantic?
2. Will US regulators require Deutsche Bank to recapitalize Taunus Corporation, its US bank holding company, in order to comply with the Dodd-Frank Act’s Collins Amendment?
3. Will the SEC investigate Deutsche Bank’s CDO practices leading up to the financial crisis? And if not the SEC, what about the US Attorney’s office? Or the New York Attorney General? Or the new mortgage fraud task force announced by President Obama during his recent State of the Union address?
4. Has Deutsche Bank adequately reserved for its mortgage-related loss and litigation exposures in the US? Will Deutsche face additional liabilities as a result of its role as one of the largest trustees for US MBS pools?
5. Will Deutsche Bank’s dual-CEO structure lead to a power struggle between Anshu Jain and Juergen Fitschen?
6. How will new Dodd-Frank derivatives rules, many of which have yet to be written, impact Deutsche Bank’s derivatives business?
7. Will Deutsche Bank formulate a long-term strategy for its $4.6 billion in credit exposures to Las Vegas casino companies, especially with respect to labor relations?
8. Will Postbank achieve profitability in the face of write-downs on sovereign debt and a slowdown in the German economy?
9. Can Deutsche Bank afford the Basel G-SIB capital surcharge by 2013? Or 2016? Or will the German and French governments succeed in their efforts to weaken the new European Banking Authority capital and liquidity standards?
10. Will Deutsche Bank seek additional approvals from shareholders to raise capital?
11. If Deutsche Bank, with a leverage ratio of 35/1, is forced to deleverage, how will the bank’s profitability and shareholder value be impacted? Will Deutsche Bank’s “sky-high” leverage ratio amplify the effects of sovereign losses on shareholder equity?
12. Will Deutsche Bank require additional government bailouts?
And, of course, let us know if you have any questions – or answers – to add!