Aiming for that 9-to-1 job?... According to Bloomberg, Deutsche Bank's NYC-based workers are leaving the office post-lunch for beers nearby. According to other sources, the big German bank expects the CEO to announce layoffs of up to 20K of its 91.5K workers. Now that Deutsche's savior mega-merger with Commerzbank is off, it's taking out the axe.
1 number says it all... The stock has fallen 80% in the past 4 years, and is down almost 95% from its pre-financial crisis highs. One crucial financial metric shows just how little confidence investors have in management to make money:
- Book Value = value of a company on paper: Deutsche Bank's balance sheet says it's got $71B of net worth.
- Market Value = value of a company according to its stock price: Wall Street investors think Deutsche is worth just $16B based on where the shares are trading.
- Price/Book ratio: Divide those two. The resulting Price/Book ratio helps us realize that investors are only giving the bank 22 cents of credit for each dollar of paper value. Investors think Deutsche Bank is worth less than the bank does.
It's a vicious cycle... After the financial crisis almost destroyed European economies, the continent responded with tough banking regulations. Sadly, the banks responded by making fewer loans, which slowed economic growth, which hurt corporate profits, which hurt the banks. That cycle has just been on repeat over the past decade — Now Deutsche's a shadow of its pre-'08 self.