Ho Ho Ho It's Magic: Deutsche Bank, Market Cap $14B To Spin Off $50B In Assets

Deutsche Bank, with a market cap of under $14 billion looks to spin off $50+ billion in allegedly productive assets.

I am scratching my head a bit over this idea. From the expression on CEO Christian Sewing's face, he is too.

Please consider Deutsche Bank Plans Radical Overhaul With €50bn Hived Off to 'Bad Bank'.

Deutsche Bank has drawn up plans for a radical restructuring which will involve the creation of a “bad bank” to hold tens of billions of euros of toxic assets and a round of severe cuts to its investment banking operations, according to reports.

The bad bank would house or sell assets valued at up to €50bn (£45bn) comprising mainly of long-term trades that have been a major drag on the struggling bank’s balance sheet, the Financial Times reported, citing four people briefed on the plan.

Deutsche Bank has been beset by a series of crisis in the past yearincluding money laundering allegationsfailed merger talks with Commerzbank and concerns about the lender’s dealings with Donald Trump and his son-in-law Jared Kushner.

Derivatives Spin-Off

If the headline sounds preposterous, the derivatives details as described by the Financial Times are even more amazing.

"While the derivatives destined for the non-core unit still provide some cash flow, all the profit on the deals — and therefore the associated bonuses for those who arranged them — were booked up-front."

Supposedly these $50 billion in derivative assets are actually productive, except for the fact that Deutsche Bank booked the profit up front.

Thus, the proposal is to spin off productive assets to the "bad bank" keeping what?

The Financial Times explanation is to keep its better bond business.

1 2
View single page >> |

Disclaimer: The content on Mish's Global Economic Trend Analysis site is provided as general information only and should not be taken as investment advice. All site content, including ...

more
How did you like this article? Let us know so we can better customize your reading experience. Users' ratings are only visible to themselves.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.