Deutsche Bank's problems trace back to long-ago Bankers Trust merger
In the spring of 1998, the consolidation wave in banking hit tsunami levels. On April 7, 1998, Citicorp said it would join with Travelers Group to create a "financial supermarket." Exactly one week later Banc One agreed to merge with First Chicago NBD to form Bank One, and on the same day Bank of America and NationsBank agreed to partner up.
None of those deals worked out exactly as planned. Citigroup was saddled with numerous scandals and management missteps before becoming last decade's poster-child for banking run amok. Bank One was a basket-case until Jamie Dimon straightened out the institution and sold it to JPMorgan Chase.
But arguably the worst merger struck that year was Deutsche Bank's $10 billion acquisition of Bankers Trust.
On Wednesday, the giant German bank's hard-hit stock took another blow when the Wall Street Journal reported that federal regulators have deemed its U.S. operations to be in "troubled condition."
There's no doubt Deutsche Bank bought itself plenty of trouble in buying BT, Wall Street's bad-boy institution.
For starters, BT executives routinely pocketed unclaimed customer cash in what prosecutors described as a vast slush fund. In 1999 the bank pleaded guilty to three felony charges and agreed to pay $63 million as part of a settlement with state and federal authorities.
BT was a pioneer in derivatives trading, at least until 1994 when clients Procter & Gamble and Gibson Greetings sued the bank for misleading them on those deals.
To repair customer relations, the bank hired investment banker Jerome Powell, now chairman of the Federal Reserve.
BT's specialty was making loans to businesses other banks shunned and was the only major New York lender to stick with Donald Trump in the 1990s. Banks like Chase and Citibank had abandoned the real estate developer after he defaulted on loans backed by personal guarantees. Deutsche Bank remains the lone big bank to do business with Trump today, according to the president's personal financial disclosures.
In 2015, Deutsche Bank wrote its BT assets down to zero as part of a $6.6 billion balance-sheet purge. But the stink of this long-ago merger still lingers.
https://www.crainsnewyork.com/article/20180531/FINANCE/180539972/deutsche-bank-s-problems-trace-back-to-long-ago-bankers-trust-merger
from March 1999
BT fined $63.5 million
Bankers Trust pled guilty Thursday to improperly diverting a $19.1 million in unclaimed customer funds to its own accounts in order to enhance the company's financial position.
BT was fined $60 million by the federal government and an additional $3.5 million by New York State. Bankers Trust (BT) pled guilty in the U.S. District Court in Manhattan to three counts of misstating entries in the bank's records. Prosecutors said high-ranking bank officials, under pressure to meet financial targets, improperly transferred unclaimed customer checks and deposits into Bankers Trust's own accounts, in a scheme to falsely enhance its financial performance.
The wrongdoing involved a senior managing director and a partner of Bankers Trust, reporting to the top levels of the firm's management, prosecutors said.
The bank said it has fired those who were responsible.
https://money.cnn.com/1999/03/11/companies/bankers/
we should be getting an update to the Office of Comptroller of the Currency Qtrly report on Bank Trading and Derivatives soon. Cap#2 is from the latest release of December 19 2019 for the 3rd qtr of 2019
Spanish AF AME3178 Airbus A400M west of Moscow
mornin
yes I almost edited that part out but it's important to see how they spin this shit. Just like the shotgun wedding bank failures from 2008. They never take a write down and just got another extension of the reporting rules-like they were ever enforced to begin with. The folly of self-regulation.