Page 108 - Monocle Quarterly Journal Vol 1 Issue 1 Q4

BANKING
“What seemed like a slam dunk – investing in a German lender that was one of the top 10 banks in the world, at low value – is now a hit and miss proposition.”
more than double the amount they used to hold. In addition, they can’t get the capital in the rst place.
Take Deutsche Bank as an example. Deutsche has lost 70 percent of its value in the last year. It is now worth USD 9.5 billion. It was worth USD 40 billion. It’s received about EUR 8 billion in capital in two transfers, which started in 2014, from the Qatari Investment Fund. Now, you have to be really desperate for capital if you’re going to go to the Qatari Investment Fund. In contrast for example, Goldman Sachs took on no less a dignitary than Warren Bu et as an investor in their time of need.
e Qatari Investment Fund has lost most of the value in banks that it invested in, particularly Deutsche. What seemed like a slam dunk – investing in a German lender that was one of the top 10 banks in the world, at low value – is now a hit and miss proposition. Nobody in their right mind would have predicted that Deutsche Bank would be in the position it is today.
I also wouldn’t have predicted that the Department of Justice would, this year, ne Deutsche Bank for market misconduct, to settle a set of high- pro le mortgage-securities probes from nine years ago. e ne is USD 14 billion which, by the way, is more than they are worth – and is for doing something that everybody was doing. Chief Executive of Deutsche Bank, John Cryan, gets on a plane, ies o to the USA, and comes out looking like a hero because he has potentially negotiated it down to USD 5.4 billion dollars. at burnt through almost the entire value of the capital stake that the Qatari Investment Fund holds in Deutsche. And Deutsche is on its knees wondering what do to next.
If one also takes a look at the United States’ Foreign Account Tax Com- pliance Act (FATCA) and the e ect this has had on banking worldwide, it becomes clear that the independence of banking as an industry has been radically compromised over the last decade. is piece of US legislation requires that foreign nancial institutions report on the foreign assets held by their US account holders. Switzerland lived for 800 years not giving out bank account information. en suddenly FATCA kills it. It becomes clear that the US tax authorities have more power than the South African government, the Sudanese government, the Zimbabwean government and, in fact, the entirety of Europe put together. e Americans don’t like tax evasion, so they have created a law that is not code abiding to anywhere else in the world, but is followed like the highest of all laws in all lands. Whilst I support anything that exposes tax evasion, I do have
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