The update of Deutsche Bank AG
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Deutsche Bank has compiled a research report accusing German financial regulators and the outgoing government of the Conservative government of serious failures, less than two weeks before the fiercely contested federal election.
On Tuesday, Deutsche Bank Research, the bank’s macroeconomic think tank, published a 20-page analysis setting out a “reform agenda for the German financial sector” —it was removed only a few hours later.
The report, published in German and seen by the Financial Times, describes an ‘almost unprecedented loss of importance’ of German banks on the global stage over the past 15 years. It blames regulators and policymakers for the decline.
The study accused the country’s regulators of not exposing scandals that upset the financial industry, including the collapse of Wirecard and Greensill Bank as well as alleged misconduct involving Deutsche Bank itself.
Following the Wirecard scandal, the German government BaFin’s leadership ousted and strengthen the watchdog’s powers. The new president, Mark Branson, who was stripped by Swiss regulator Finma, started last month.
The report was removed from the Deutsche Bank Research website late Tuesday. Finanz-Szene.de, a banking newsletter, first reported the disappearance.
In a statement Wednesday, the borrower said the “views and opinions” in the report represent those of the author. “It is not shared by Deutsche Bank and is not authorized by the Deutsche Bank Research leadership,” it reads.
The report was written by Jan Schildbach, a director at Deutsche Bank Research, and edited by Stefan Schneider, the German macroeconomist of the think tank. Both declined to comment by a spokesman.
“Deutsche Bank and Deutsche Bank Research distance themselves from the inappropriate criticism in content and tone of regulators and policymakers expressed in the research report,” the bank said. BaFin declined to comment.
Last year, Deutsche Bank Research caused a public uproar when it pleaded in favor of imposing a special tax on employees working at home. At the time, the borrower stood by his researchers, arguing that the brainstorming works independently of the bank.
“Overall, the independence of our research is unquestionable,” the bank told the FT, adding that the decision was taken by DB Research’s senior management.
Without referring directly to Germany’s largest credit provider, the report cites Deutsche’s own scandals – such as “money laundering, interest rates, misappropriation of US bonds or sanctions” – as examples of regulatory failure and the country’s deteriorating banking sector.
Deutsche Bank has already paid billions of euros in settlements, while 70 current and former employees, including board members, are being criminally investigated for their possible role in the cum-ex tax fraud, when investors fraudulently repaid dividend taxes that were never paid.
‘The previous configuration [of German financial regulators] apparently did not fit the purpose, as a flurry of fresh scandals has shown, ‘the report reads, and reprimanded BaFin for failing to expose the misconduct and accusing it of not having’ real audit qualities’.
The report also takes on the task of the German government in observing a crisis in the pension system, which describes it as an excessive tax on businesses.
It says that “the election manifestos of the main parties that may be part of the next government do not indicate that the government will tackle the structural sclerosis and the perennial decline of the German financial sector by force”.