Deutsche Bank: Universal Banks are a Benefit to Society. Really?

A gentleman named Jan Schildbach of Deutsche Bank (DB) has published a research report “Universal banks: Optimal for clients and financial stability; Why it would be wrong to split them up.” This report is remarkable for many reasons, but not because it makes a convincing investment case for mega banks. Rather, it proves that anybody can make a case for any proposition so long as one carefully avoids touching any inconvenient facts.

The TBTF banks are parasites that drain resources from society. This ridiculous, self-serving analysis by one of the most hideous examples of “too-big-to-fail” makes that point nicely. Indeed, as one reads the DB report, it is tempting to laugh – were the subject no so sad and so serious. Keep in mind that my firm, Institutional Risk Analytics, calculates Economic Capital and Risk Adjusted Return on Capital (RAROC) for all US banks. The RAROCs for the top US universal banks are usually ~ 0 or even negative, as shown in the table below.

Rest here…

Copy of the report below…

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4closureFraud.org

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Universal banks: Optimal for clients and financial stability