Turkish: No, Tommy. There's a gun in your trousers. What's a gun doing in your trousers?
Tommy: It's for protection.
Turkish: Protection from what? "Zee Germans"?
From Marketwatch :
Before the data were released Thursday, a few analysts had speculated that Citigroup (C:Citigroup, Inc
C48.50, +0.15, +0.3%) , J.P. Morgan (JPM:jp morgan chase & co com JPM45.95, +0.28, +0.6%) , Bank of America (BAC:bank of america corporation com BAC51.87, +0.04, +0.1%) and Wachovia (WB:Wachovia Corp WB49.57, -0.13, -0.3%) had each borrowed $500 million from the Fed in order to mask heavier borrowings from another, unnamed bank that was truly in trouble and needed the infusion of cash.
In addition to the four banks that announced borrowings Wednesday, Deutsche Bank said it had gone to the discount window on Friday for an undisclosed amount for an undisclosed term. All the banks said they didn't actually need the money and could have obtained funds at a lower rate through the federal funds market, where the effective rate has been below 5%
From Institutional investor.com on Aug 24th, 2007 :
Deutsche Bank's Principal Strategies Group, a proprietary trading desk, lost roughly €100 million ($135 million) in credit-market trades in the past month, The Wall Street Journal reports.
Consequently, the desk has decided to avoid certain types of trades, specifically, relative-value strategies within credit trading. The group will also reassign some employees.
The Principal Strategies Group is part of Deutsche Bank's Global Markets Division, headed by Anshu Jain. The bank generated about €2 billion in revenue from credit trading during the first half of this year, which includes Principal Strategies. The 15-person unit run by Gerry Jackson in London makes trades in European credit markets with the bank's money.
From Bloomberg on Aug 1st, 2007 :
Deutsche Bank's sales and trading unit, run by Anshu Jain, accounted for almost half of the company's 8.8 billion euros of revenue. The bank said it benefited from ``favorable market positioning'' in credit trading as U.S. housing suffered the worst slump in 16 years. By contrast, Goldman Sachs Group Inc. had its biggest quarterly drop in fixed-income revenue in almost four years.
``The bank posted very positive results for the current environment,'' said Dieter Ewald, who helps manage $19 billion at Frankfurt Trust, including Deutsche Bank shares. ``There had been a lot of speculation regarding the subprime crisis.''
From Euro2day on Aug 1st, 2007 :
Deutsche Bank's decision to bet on the US subprime mortgage market weakening is looking increasingly clever as the German bank Wednesday delivered another set of stellar quarterly results.
It is more than a year since Deutsche Bank analysts at an industry conference in Barcelona forecast that the subprime mortgage sector was heading for tougher times. At the time, many of its rivals were optimistic about the sector's prospects.
Indeed, many of the bank's competitors remained upbeat about the sector during the first half of 2006. Since then, defaults have begun to occur in the sector and many of the structured credit instruments that were backed by the most risky, high-yielding property loans have been hit by valuation downgrades.
Many large investment banks including HSBC, Bear Stearns and UBS have been hit by the sharp downturn in the market. This week IKB, a German lender to small companies, had to be rescued by its main shareholder as a result of bets on the market, while Dresdner Bank and Commerzbank warned of modest provisions for losses in the mortgage market.
However, Deutsche Bank and its legion of market experts, led by Anshu Jain, the global head of markets, stuck to their predictions.
While the bank was cautious about its exposure to the market, in the first quarter its credit proprietary trading desk – which invests Deutsche Bank's own money in the market – began shorting the subprime mortgage market.
The bank took positions in the ABX index that paid off when the market slumped at the beginning of the year.
"Someone saw an opportunity and that was a good move," said Josef Ackermann, Deutsche's chief executive, when the bank released first-quarter results.
Yesterday, the bank did not want to single out gains in the subprime mortgage market and said rising profits had been "broad-based". One reason why the bank might be adopting this stance is that is has not been entirely unaffected by the market meltdown. Deutsche Bank was a junior lender to the hedge funds run by Bear Stearns that imploded amid losses in the US mortgage market.
But in spite of not wanting to promote its gains much, there have been no signs of Deutsche Bank changing its stance on the market.
Three weeks ago, Karen Weaver, global head of securitisation research at Deutsche Bank, warned that the fallout in the market could be "a very slow-moving train that still has a long way to run".
The big question for Deutsche Bank and the market at large remains whether the conditions at the riskiest end of the US mortgage market will spill over into other markets.
One area that has already experienced higher risk-aversion is the leveraged finance market. Several leveraged loan and bond deals have been delayed or substantially altered, as investors have started to turn away deals.
Anthony di Iorio, chief financial officer, yesterday stressed that revenues from Deutsche Bank's leveraged finance business had generated only 4 per cent of group revenues in recent quarters.
But he said the bank had become "more selective" in its business in the second quarter.
"We turned away from opportunities," he said.
He said the bank had reduced its commitment to so-called equity bridges, when underwriting banks take on large stakes in companies before the loans are syndicated.
Mr Di Iorio said the bank would continue to reduce its exposure to equity bridges further.
