Description
FIN464, Case Study#2: Deutsche Bank Restart: Goodbye Goldman Sachs of Europe?
Learning Objectives for FIN464 students:
– Understand the complexities of a global bank
– Analyze financial reports, key performance, and capital ratios for banks
– Discuss differences between European and US banking
– Use Thomson Reuters or Bloomberg to analyze/interpret financial data
– Discuss the recent turmoil in the banking sector
Questions
Go to Darden Publishing website, download and read the following case:
http://store.darden.virginia.edu/deutsche-bank-res…
This case describes the latest restructuring efforts by Deutsche Bank (DB). In July 2019, Christian Sewing, the new CEO of DB, announced a series of measures that included, among others, the elimination of global equity trading, the layoff of 18,000 employees, the creation of a “bad bank” to transfer noncore assets, and the suspension of dividends until 2022. The case describes key decisions a bank CEO must make when a bank needs to change course to return to profitability and growth. The case puts the students in the CEO’s shoes: What would you do and why? The case also describes key banking performance metrics (e.g., ROE, ROA) and other critical variables such as those reflecting capital health (Tier 1 ratio), as well as gives an overview of the bank business model and factors impacting bank profitability and value.
Q1 and Q2 refer to the data and period presented in the UVA/Darden Case
(Reminder: I will deduct points if you do not support your answer with empirical evidence/data from the Darden case. Make clear references to the case information, Figures and Exhibits.)
Q1. Why has Sewing put forth yet another restructuring plan for DB? Do you agree with Sewing’s plan? Why or why not?
Q2. Deciding what to cut and how much to cut is not straightforward. What indicators is Sewing considering for his decision? What might be the repercussions of such a decision for DB?
[Q1 + Q2: 1 page write-up max. Use the data and information from the Darden case.]
After reading the case, use Thomson Reuters or Bloomberg databases to collect updated data on DB. Specifically, please provide an Excel file with the following updates:
-Figure 1, Exhibit 4, Exhibit 6, Exhibit 7 (only P/TBV for DB and peers) for the years 2019, 2020, 2021 and 2022.
– Exhibit 3, only for the year 2022 (page 13)
The excel file must contain the underlying data you use to create the updated Figure 1, Exhibit 3, Exhibit 4, Exhibit 6, and Exhibit 7 (i.e., data + charts, not just a screenshot of the charts).Furthermore, indicate the source of the data you are using. Use Thomson Reuters, Bloomberg or public company filings. Do NOT use WRDS, Yahoo finance, Statista, or other sources. Note: updated numbers may be slightly different from the case, but they should not be substantially different. Trends should be similar. Report all financial variables in USD currency, paying close attention to the conversion exchange rates for non-US companies. If data is missing in Thomson Reuters or Bloomberg, please refer to public filings.
Based on the updated figures, data, and exhibits that group has researched, answer the following questions:
3a) What do the historical financials tell us about Deutsche Bank’s profitability ratios in terms of ROA/ROE for the past three or four years? How does/did Deutsche Bank’s profitability compare to its peers? Is the restructuring plan working? Explain similarities/differences (pre vs. post restructuring plans). Use thefinancial data you downloaded to support your findings.
3b) What are the big issues Deutsche Bank is dealing with today? What can the bank’s management do/how is it performing? What would you advise (in comparison to management’s current performance) and why? Support your opinion and advice with the financial data you downloaded and with YOUR data analysis.
3c) DB share price tumbled after March 9, 2023, and thenagain after March 21. During that period, we saw the SVB blowup, the Credit Suisse acquisition by UBS, and the subsequent volatility around DB shares. What similarities and differences can you draw between the three banks (SVB, Credit Suisse, and DB)?
[Q3: 1.5 pages write-up max]
4. Read the following WSJ article “With Interest Rates Up, Get Ready for Financial Drama” https://www.wsj.com/finance/with-interest-rates-up…
The German philosopher Georg Hegel famously said “The only thing that we learn from history is that we learn nothing from history.” What does the WSJ article teach us about the past linkages between rising rates and financial blowups?
[Q4: 0.5 pages write-up max]
Write-up instructions
In answering the questions, your group must take a position and express an opinion. You must support your opinion with facts, theory, and empirical evidence. I want to see numbers! Be aware: numbers alone do not tell a story. You must analyze the numbers and tell a story around them.
Please use the assigned readings when answering your questions. Do not use blogs, Wikipedia, Investopedia, etc. If you need to refer to an article, use only the FT, WSJ or the Economist as sources for your research when expressing your opinion. I will deduct points if: 1) you do not support your answer with empirical evidence/data; and 2) you use sources such as blogs, Wikipedia, Investopedia, or press articles outside the FT, WSJ or the Economist.
Your sources must be properly cited in the bibliography. Using someone else’s wording without quotation marks is considered plagiarism.
In general, I expect each answer to be supported by data analysis. Show your work and clearly refer to the numbers(including the number page where they can be found) used in your analysis to support your opinion and statements.
Please clearly identify in the write-up the question that you are answering (Q1, Q2, Q3, Q4).
Prepare a short write-up: at most 3 pages of discussion/analysisplus at most 2 pages of bibliography, charts, tables, appendix (if any), etc., typed in 12 pts with one-inch margins and 1.5 spacing. Please also include an Excel worksheet with the data used to answer question 3 (do not overflow the file with unnecessary data or with data you do not use in the analysis). The write-up must address ALL questions and it must include a cover page (see below).
So, to wrap up:
• Write-up inclusive of ALL questions – All groups
• Excel file re: Q3 – All groups
Presentations and Q&A instructions
Groups 4, 5, and 6 will present Case 2:
Group 4 will present Q1 and Q2
Group 5 will present 3a.
Group 6 will present 3b and 3c.
Presentation: MAX 8 minutes. Discussion will follow. All members of the group must be present and ready to answer questions.
Groups 1, 2, and 3: prepare five different questions for open discussion, one for each of the above Q1, Q2, Q3a, Q3b, Q3c.Please provide written answers to your questions, too. Have a printout of the questions (with answers) ready at the beginning of class to provide to Prof. Bruno. You will lead the Q&A discussion during the presentations.
Files upload instructions
Upload
– the Excel file, and
– the write-up, presentations or Q&A IN PDF FORMAT
in Canvas (within the folder ASSIGNMENT — Case#2) by Wednesday, November 15, 11am EST. One upload per group.
Please label the file with your respective group number (FIN464_SectionAB_Case2_GroupXYZ)
Remember that I will deduct points if: 1) you do not support your answers with empirical evidence/data; and 2) you use sources such as blogs, Wikipedia, Investopedia, or press articles outside the FT, WSJ or the Economist; 3) you do not properly cite your sources; 4) you do not refer to the page where the statistics/number/reference has been reported; 5) your deliveries are late; 6) the formatting of the write-up is not professional (e.g., there are typos, improper citations, etc.); 7) the write-up seems more a copy and paste of separate pieces than a group project (e.g., it has inconsistencies or answers that contradict oneanother); 8) you do not label the file correctly; 9) you do not include the cover page; 10) you do not follow all the other instructions.
In grading the case, I will take into consideration the write-up,the Excel file, the presentation and Q&A. Hence, if your write-up is of great quality but your Q&A/class discussion/ presentation is not, you will not get full points.
A 2.5 bonus points are available if the group schedules a 15 minutes Zoom meeting with TA David to discuss Q3. This must occur either on Sunday November 12 or on Monday November 13 during David’s office hours. You must make an appointment with David in advance. Due to space limitations, book your appointment early and use this link here
Note (1): not all of the group members need to attend David’s OH to receive credit.
Note (2): please do not ask David to answer Q3 for you.Prepare the one-page write-up related to Q3 and David will provide feedback.
Dress-code: business casual. Jeans and sneakers are ok. No hats, no sweatpants.
COVER PAGE
Insert Group # and member names_______________________________________________
Acknowledge by ticking the relevant boxes
Our group met with TA David before the due date of Case#2
Our write-up conforms with the instructions of the case and does not exceed the page limit
Our group proofread the write-up and it is a professional document with proper formatting.
The documents have been saved as (FIN464_SectionAB_Case2_GroupXYZ)
Our group members checked the list in the “Remember that I will deduct points” paragraph on page 5 of the case instructions.
2
