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

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…



Universal banks: Optimal for clients and financial stability

2 Responses to “Deutsche Bank: Universal Banks are a Benefit to Society. Really?”
  1. Sue Em says:

    What a bunch of boloney! Banks have done nothing to benefit society as a whole. They don’t create anything for society. They play casino with people’s money and call it “financial innovation”. I can’t believe the author has the guts to promote TBTF by arguing “Probability of government support for failing banks”. They better not bet on another bailout just yet. The next time banks are asking for a handout lets show them what capitalism is – you fail, tough $hit, you go.

  2. Louise says:

    Which one of Hitler’s henchmen said that if you tell the lie often enough and loud enough, the people will come to believe it. What’s up with that?

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