Deutsche Bank: Case Analysis Example

Published: 2024-01-03
Deutsche Bank: Case Analysis Example
Type of paper:  Essay
Categories:  Finance Business War Banking
Pages: 5
Wordcount: 1293 words
11 min read

The Deutsche Bank is the biggest bank in Germany and a huge financial institution globally. It is headquartered in Frankfurt; it has thousands of affiliates in other countries to provide international customer service. The Deutsche Bank opened in 1870 based on foreign trade, with three international branches in China, Japan, and the United Kingdom in three years (Goyal, and Vijay, 34). The Bank challenged various projects. In the first half of the twentieth century, it started facing challenges due to war, inflation, and other global crises, which resulted in many acquisitions and joining merges.

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On January 22, 1870, the Deutsche Bank was started in Berlin as a separate bank to conduct foreign trade. "The mission of this organization is to promote and facilitate trade relations between Germany, other European countries, and foreign markets, especially for all types of banking business transactions," the Bank Ordinance stated. It was established for investment and trading banking purposes. After the end of World War, I, inflation increased in Germany because of instability in economic and political sectors (Jermakowicz, and Robert, 375). The Dutch Bank had to sell foreign assets as the borrowers could not repay the loan. Germany was occupied at the time of the Great Depression during the 1930s when the Dutch Bank was not far back. At the end of World War II, property and money had been removed from the Jews to the government of the Germans. After World War II, the Dutch Bank split into ten different banks and announced their names. After ten years, the previous fronts of de Frankfurt, Hamburg, Munich, and Freldorf, were amalgamated and permitted to do their operations under their old name.

During the crisis, they had to study workers' behavior, and the Bank had to apply various changes in the structure due to the unusual mix of an American and German bank. However, they had to inform the employees about the practicality of the accession and the returns they expected from it (Goyal, and Vijay, 37). As a result, the Directing Board decided to rebuild its Human Resources function which had 1600 personnel. Due to a change in the environment and the new economy's emerging demands, the Directing Board decided to make its Human Resources more value-creating and strategic. This was followed by implementing a new competency model and development strategy for the Human Resource workers.

As the global financial situation deteriorated further, the Dutch Bank began to expand its operations abroad. As of 2001, he has served in more than 70 countries. Dutch Bank focuses on investment banking activities compared to traditional commercial banking. In 2007, 62% of bank revenue came from banking activity deposits. The historical financial position of the Dutch Bank shows that the Bank has surpassed the ROA in terms of performance. This Bank has a very high ROE when compared to other banks. Several graphs display that the revenue on equity increases each year significantly. ROA cannot be identified as ROE (Jermakowicz, and Robert, 378). This means that the Dutch Bank will increase profits to a great height. This comes at the expense of increased risk, as more assets translate into higher risk because they took the money without using their help. JPMorgan Chase bought twice as much ROA as Dutch Bank in 2006. Although ROA and RO are equal in maximizing profits, a bank alone does not focus and increase. Therefore, Dutch bank assets should be invested to reduce the credit risk burden.

The debt crisis in Europe has greatly affected the world. The Dutch Bank has no difference because its interests have changed and are lower. Basel III was established for the improvement of the regulatory structures for banks. Based on Basel III, risk-weighted assets must continue with a tier 1 equity capital ranging between 9.5% and 13.5%, up from 4%. Some other risk weights and rules are allocated to various categories. All of these grow according to the laws of Basel III. Banks must begin complying with Basel III regulations from 2013 and completely comply by 2019 (Goyal, and Vijay, 33) Banks always make use of the following processes to finance assets' growth on the balance sheet: i.e. previous income, the new funds, or utility loans. The provision of new capital reduces the equity value of existing shareholders, repays the risky debt, and increases debt. The Dutch Bank hired Basel III employees, and Post‌Bank increased its stake in Germany to 93.7% in February 2012.

ROE and ROA are an essential factor when calculating business profits. Equity Return (ROE) is a measure of income from equity, calculated as ROE = Asset Return (ROA) * Gear (Leverage). The Dutch bank dividend has fallen sharply in the last financial year. In other words, the price based on ROA / ROE analysis is weaker than in the past (Jermakowicz, and Robert, 380). Dutch Bank's ROA and ROE increased between 2002 and 2006, decreased slightly from 2006 to 2007, and then significantly decreased by 37.88% in ROA and ROE from 2007 to 2008, particularly ROE. The year and two numbers were negative, and the global financial crisis contributed to this situation.

As we can see from this case, although the growth rate of ROA has changed slightly over the years, there has been a significant increase in ROE, resulting in a substantial change in consumption, leading to an unexpected rise in ROE instead of a slight increase. This ratio is a measure of corporate debt and equity finance and high cost and equity financing for risk and debt financing firms (Goyal, and Vijay, 38). This activity increases the profit and loss of the business. In response to ROA and ROE choosing more financial assistance from the organization, the ROE is too broad because there is no real increase in total assets or gross income compared to the owner. Instead, a company buys its stock and raises the ROE by making more claims, because more shares represent more power.

The international financial crisis inspired the introduction of Basel III, the standard of global banking management, as well as its introduction which resulted in the setting and reorganization of the global financial regulation standards and influencing business models and development strategies. Bank. If so, there is very little difference between the current Dutch Bank and Basel III requirements, which means that the Dutch Bank-level ratios may still not meet the Basel III standards.

In my opinion, the Dutch bank policy in light of the Eurozone debt crisis is promising. This is because it failed to meet the requirements of Basel III, and because of the credit crunch that exacerbated the problem. The Bank suffered significant losses. Although the situation has improved since GFC and the ratio has risen again, the Dutch Bank is facing difficulties in future growth.

Emerging from the post-crisis, the Dutch Bank has dominated international foreign trade by providing commercial investment banking services worldwide. However, during and after the financial crisis of the 1870s, the Bank was still looking for small businesses that could not hold a final meeting, especially in their home. Dutch Bank handles state-issued securities and international transactions for German companies. It turned out to be more profitable than their peers. As a result of strong leadership, the Bank expanded its operations worldwide until the twentieth century (Jermakowicz, and Robert, 382). The Bank must ensure that investment analysts and shareholders meet these requirements according to the capital requirements imposed by the new role assignment and the Global Banking Regulation. Therefore, the report may not be strong enough to convince clients that these requirements will be met and that the Bank's global operations will be successful, making essential recommendations with strengths and weaknesses and other options.

Works Cited

Goyal, K. A., and Vijay Joshi. "Merger and acquisition in banking industry: A case study of ICICI Bank Ltd." International Journal of Research in Management 2.2 (2012): 30-40.

Jermakowicz, Eva K., and Robert D. Hayes. "Framework-based teaching of IFRS: The case of Deutsche Bank." Accounting Education 20.4 (2011): 373-385.

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