Deutsche Bank in the news for wrong reasons but future could still turn out bright

There’s a bad day at most companies, and then there’s a typical 24 hours at Deutsche Bank. Even by the German lender’s low standards, November 29 would stick out as a dies horribilis: a police raid on its Frankfurt HQ followed by an achingly defensive press release, media speculation that the head of its investment bank is under pressure to go, and further dips in its share price. Even so, there are still reasons to believe Deutsche can bounce back.

True, the raid – complete with a fleet of black vans parked outside – is a PR disaster. It could be more a way for the German authorities to show they are doing something, given Deutsche is at risk of being drawn into the Danske Bank affair. There’s a similar shrug-worthy quality to the news, reported by the Financial Times in late November, about the future of Garth Ritchie, the head of the investment bank. Even if he were to leave, Deutsche has a number of structural trends that should benefit its bedrock fixed income division, which accounts for nearly a fifth of group revenue. Ongoing currency volatility, predicted to last well into next year, should help widen spreads and mean more profits. Rising European rates should help reverse recent revenue declines.

Meanwhile, Deutsche has only just begun to extract a targeted 900 million euros ($1,019.7 million) in synergies from its merger with Postbank in Germany, a combo which was completed in May. To that end, boss Christian Sewing need not unduly worry about one bad day in the office. His future will be governed by Deutsche’s success, or otherwise, over the next 12 months.

The author is Christopher Thompson, a Reuters Breakingviews columnist. The article was first published on Reuters Breakingviews. bizopinion@globaltimes. com.cn