Volume 03 Issue 06-2023
11
International Journal Of Management And Economics Fundamental
(ISSN
–
2771-2257)
VOLUME
03
ISSUE
06
Pages:
11-13
SJIF
I
MPACT
FACTOR
(2021:
5.
705
)
(2022:
5.
705
)
(2023:
7.
448
)
OCLC
–
1121105677
Publisher:
Oscar Publishing Services
Servi
ABSTRACT
The article aims to shed light on the recent predicaments faced by Deutsche Bank, offering insights into the underlying
factors contributing to its current state. It examines various challenges such as legal and regulatory issues, financial
performance, and reputational concerns, with an emphasis on understanding their implications for the bank's stability
and reputation.
KEYWORDS
Deutsche Bank, challenges, banking sector, legal and regulatory issues, financial performance, governance, risk
management.
INTRODUCTION
Deutsche Bank, established in 1870, is a prominent
institution in the European banking sector and holds
the position of being the largest lender and bank in
Germany. The bank operates across multiple
segments, including retail banking, corporate banking,
global transaction banking, asset and wealth
management, effectively catering to a diverse
clientele. However, recent years have presented a
series of challenges that have significantly impacted
the
bank's
stability
and
reputation.
This
comprehensive analysis aims to delve into the causal
factors behind these issues.
Research Article
ANALYZING
CHALLENGES
FACED
BY
DEUTSCHE
BANK:
A
COMPREHENSIVE EXAMINATION
Submission Date:
June 01, 2023,
Accepted Date:
June 05, 2023,
Published Date:
June 08, 2023
Crossref doi:
https://doi.org/10.37547/ijmef/Volume03Issue06-03
Zokirov Diyorbek Botir Ugli
Student, Inha University, Incheon, South Korea The Department Of International Business And Trade,
Uzbekistan
Journal
Website:
https://theusajournals.
com/index.php/ijmef
Copyright:
Original
content from this work
may be used under the
terms of the creative
commons
attributes
4.0 licence.
Volume 03 Issue 06-2023
12
International Journal Of Management And Economics Fundamental
(ISSN
–
2771-2257)
VOLUME
03
ISSUE
06
Pages:
11-13
SJIF
I
MPACT
FACTOR
(2021:
5.
705
)
(2022:
5.
705
)
(2023:
7.
448
)
OCLC
–
1121105677
Publisher:
Oscar Publishing Services
Servi
One key aspect to consider is Deutsche Bank's pursuit
of a high-risk business strategy heavily reliant on
investment
banking,
derivatives
trading,
and
structured finance. While this strategy initially yielded
success, it exposed the bank to substantial risks that
became evident during the 2008 financial crisis.
Although a high-risk business strategy can offer
potentially high rewards, it can also prove perilous and
give rise to various risks, including financial losses,
reputational damage, and even bankruptcy.
In recent years, Deutsche Bank has encountered legal
and regulatory issues, such as fines for money
laundering, sanctions violations, and benchmark
interest rate manipulation. These problems have
inflicted significant damage on the bank's reputation
and eroded investor confidence. Critics have
highlighted
poor
risk
management
practices,
particularly concerning complex financial instruments,
and insufficient controls against financial crimes like
money laundering. Inadequate risk management can
result in unforeseen losses, financial instability, and
reputational harm.
Some argue that Deutsche Bank's toxic corporate
culture, which prioritizes short-term profits over long-
term stability, has contributed to its failures and
scandals. Furthermore, the bank has experienced
frequent leadership changes, including a revolving
door of CEOs and senior executives, leading to a lack of
strategic direction and overall instability.
Tim Smart, a senior editor at U.S. News & World
Report, has highlighted that Deutsche Bank has
witnessed a decline in its shares across global
exchanges, accompanied by a significant increase in
the cost of insuring its bonds against default. This
development serves as another indication of a
potential global banking crisis looming on the horizon.
Smart attributes the bank's challenges to weaknesses
exposed by the rapid interest rate hikes implemented
by central banks worldwide and concerns over a
potential global economic slowdown. Additionally, he
emphasizes that Deutsche Bank's mismanagement of
deposits has led to a liquidity crunch, posing a threat to
its solvency.
Reporters Robert Schmidt and Jesse Hamilton from
Bloomberg News have revealed that the Federal
Reserve has privately communicated to Deutsche Bank
about deficiencies in its compliance programs. This
communication serves as an indication of the bank's
failure to adhere to several previous agreements with
U.S. regulators. According to Schmidt and Hamilton,
the Fed's annual regulatory assessment highlighted
Deutsche Bank's failure to improve its risk
management
practices,
despite
being
under
confidential agreements with the central bank to
address these issues. They also disclosed that the
bank's leadership was preparing for potential
sanctions, including the possibility of substantial fines.
Volume 03 Issue 06-2023
13
International Journal Of Management And Economics Fundamental
(ISSN
–
2771-2257)
VOLUME
03
ISSUE
06
Pages:
11-13
SJIF
I
MPACT
FACTOR
(2021:
5.
705
)
(2022:
5.
705
)
(2023:
7.
448
)
OCLC
–
1121105677
Publisher:
Oscar Publishing Services
Servi
In a report by DW News, a German public broadcaster,
it has been revealed that Deutsche Bank has been
embroiled in a series of scandals over the years. These
scandals range from involvement in money laundering
and tax evasion to market manipulation and fraud. The
bank's reputation has suffered due to its association
with questionable transactions involving clients such
as Jeffrey Epstein, Danske Bank, and Wirecard.
Additionally, Deutsche Bank's governance has faced
criticism from shareholders and regulators due to a
lack of transparency and accountability.
CONCLUSION
In conclusion, Deutsche Bank, once a prominent
institution in the European banking sector, has faced
numerous challenges that have significantly impacted
its stability and reputation. The bank's high-risk
business strategy, heavily reliant on investment
banking and derivatives trading, initially brought
success but ultimately exposed it to substantial risks
during the 2008 financial crisis. Legal and regulatory
issues, including fines for money laundering and
violations, along with a lack of effective risk
management practices, have further eroded Deutsche
Bank's standing and investor confidence. The bank's
corporate culture, emphasizing short-term profits and
a revolving door of leadership changes, has added to
its instability. These factors, coupled with the bank's
slow adoption of technology and lack of strategic
focus, have contributed to its decline. Addressing
these challenges and focusing on enhancing risk
management, governance, and customer-centricity
will be crucial for Deutsche Bank to regain stability and
pave the way for a successful future.
REFERENCE
1.
https://www.usnews.com/news/economy/articles/
2023-03-24/meltdown-in-deutsche-bank-shares-
shows-banking-crisis-is-not-yet-over
2.
https://www.cnbc.com/2023/03/24/deutsche-bank-
shares-slide-8percent-after-a-sudden-spike-in-
default-insurance-costs.html
3.
https://apnews.com/article/deutsche-bank-svb-
credit-suisse-bank-collapse-
8a9a9b107638cf4c8872ea8772a70ed5
4.
https://apnews.com/article/deutsche-bank-svb-
credit-suisse-bank-collapse-
8a9a9b107638cf4c8872ea8772a70ed5
5.
https://news.bloomberglaw.com/banking-law/fed-
admonishes-deutsche-bank-for-ongoing-
compliance-failures
6.
https://www.dw.com/en/deutsche-banks-biggest-
scandals/a-54979535
