Deutsche Bank Near Bankruptcy, Could Retail Boss Save It?

The giant Deutsche Bank is near bankruptcy, and, according to the Financial Times, the only way to save it would be if its retail boss, Manfred Knof, could extract €1.4bn in annual cost savings and increase revenues.

The giant Deutsche Bank is near bankruptcy, and, according to the Financial Times, the only way to save it would be if its retail boss, Manfred Knof, could extract €1.4bn in annual cost savings and increase revenues.

When did it all start?

That the Deutsche Bank is near bankruptcy is now news at all. The rumors started back in 2013 when the investment bank recognized the need for capital. To obtain those funds, they sold shares worth 4,500 euros. But that wasn´t enough and, shortly after that, they offered more shared with a 30% discount. This measure, of course, enraged those who had bought shares before.

Two years after those events, it was pretty clear that the Deutsche Bank lacked money, and it faced a net loss of almost 7,000 million euros, something that hadn´t happened since the 2008 crisis.

What put the Deutsche Bank in this situation?

According to the Professor of Economics and Law William Black, what put the Deutsche Bank near bankruptcy were the mistakes and financial crimes. He literally claimed in March 2018, that the Deutsche Bank (DB) was the “largest criminal enterprise in Germany.”

Professor’s Black words caused a huge impact, and many wouldn´t take his words seriously. However, in mid-October 2019, Chicago Federal Judge John Tharp ruled that ex-DB traders can be prosecuted for alleged “spoofing,” under the wire fraud statute. This decision will enable criminal cases against two former Deutsche Bank metal traders, accusing them of spoofing trades. Allegedly, the two men had been manipulating precious metals markets from 2009 to 2011.

Seeking solutions

In the beginning, the solution to save the Deutsche Bank, the possibility of merging it with the Commerzbank, was considered. Yet, as this other German bank had enough problems on its own, German regulators discarded the possibility since merging two entities, both with huge losses, would worsen the scenario.

Drastic measures to deal with Deutsche Bank near bankruptcy

High hopes were put into the “ruthless” retail boss Manfred Knof management, who is determined to deliver results. The recently announced decisions reducing the Executive Council, performing a rigorous restructure of the investment bank, and cutting down 18,000 job positions up to 2022, are part of the strategy of reducing costs and focusing on the activities of corporate banking, financing, currency exchange, private banking, and asset management.

Regarding most cuts, Deutsche Bank has said that most of them will affect back-office staff and support roles, located in places as distant as Florida, India, the Philippines, and Germany. This massive job cuts raised uncertainty and anxiety in all its employees, although in October 8, 2019, it was announced that the Deutsche Bank had no plans to perform further job cuts.

There´s no doubt those new and drastic measures are being taken trying to maintain the giant Deutsche Bank alive – which rather than near bankruptcy seemed to be standing at the edge of the deepest of the cliffs. Will the efforts be enough? Will “Ruthless Knof” save the monster from extinction?

Could cryptocurrency be the saviour? See also about Vatican facing bankruptcy.

Understanding Blockchain Technology

Blockchain technology finds its origin in the digital coin named Bitcoin. It was invented primarily to sustain it. Although blockchain is tightly associated with Bitcoin and other cryptocurrencies, these are just the top of the iceberg.

Blockchain technology finds its origin in the digital coin named Bitcoin. It was invented primarily to sustain it

Currently, blockchain technology is being used in other commercial applications, and annual growth of 51% is expected for 2022 in several markets, including financial institutions and Internet of Things (IoT).

What is blockchain technology, and what makes it secure?

A blockchain is a list of digital records or blocks of data that are stored in a linear chain that is constantly growing. It´s a kind of digital general ledger than can be shared with many users and that keeps record of every transaction. Each block contains encrypted data, for instance of a Bitcoin transaction, and is linked to the specific user that made it. There´s no way to alter the data in them since they are time-stamped and connected to the previous block.

The security of blockchain relies on the fact that it can be updated only with the agreement of all the participants and the system itself. 

The information of the whole chain is kept in each node, so each participant has an exact copy of the entire chain. If someone wanted to attack the service, he should overturn or nullify every node in the net given that just one operative node is enough for all the information to be available. 

As new records are created, these are verified and validated by the nodes and added to a new block that is linked to the chain. Once added, this block becomes unalterable. For a transaction to be accepted and added, some specific digital signatures or requirements must be met. For example, people that use the crypto-currency Ethereum, must meet several conditions to demonstrate that they have that crypto-currency and can operate with it. 

Why is blockchain useful for?

As it is a peer-to-peer network, where transactions are time-stamped, and that enables managing all the information exchange among the users in an autonomous way, without the need for an administrator, it is an excellent tool for all types of businesses. Any information that needs to be kept intact and available can be safely stored in a blockchain. 

Many industries, such as transport, fintech, and sanitary services, to mention just a few, are taking advantage of this technology that streamlines processes, improving productivity. 

Challenges organizations or companies could face with blockchain

Thanks to blockchain, the operative models and business-making models of the companies and organizations could undergo a total transformation with the adoption of blockchain technology. Many organizations are using blockchain technology for their transactions. Still, if it were massively adopted, one of the challenges that governments of extremely controlled sectors will have to solve is the lack of regulation.

Blockchain is complex, and it takes a longer time to process any transaction. It can take hours to complete a transaction. And the more it grows, the slower it gets. This could be an obstacle for specific industries.

Despite the above, the biggest challenge that blockchain technology faces is the reluctance of private and public sectors, along with the skepticism of the potential users who, as with each new technology, need time to learn, get used, and trust.  

See also about Modern Monetary Theory and Internet of People – IoP

Global Lending Automation Platform Trade Ledger Announces £1.5m Funding Round Led by Hambro Perks

The world’s first open banking business Lending-as-a-Service platform has completed a £1.5m funding round led by Hambro Perks, the leading UK early-stage venture firm.

Martin-McCann-CEO-Trade-Ledger
Martin McCann CEO Trade Ledger

London, 30 October 2019 – Trade Ledger, the ground-breaking business lending platform, which automates commercial lending processes for global banks and alternative finance providers, today announces strategic investment in a £1.5M round led by Hambro Perks, to further accelerate revenue growth.

Established in 2016 and now operating on three continents, Trade Ledger’s unique lend-tech platform automates all types of digital business finance, helping bank and non-bank business lending organisations alike to fast-track economic growth through process automation and scaling of business credit operations. Trade Ledger uses financial data APIs (often referred to as Open Banking), Machine Learning, Artificial Intelligence and Robotic Process Automation technologies to enhance or replace old and costly legacy bank systems for origination, credit decisioning, take on and loan management, enabling new cutting-edge working capital solutions for business customers. The resulting new lending solutions can reduce the time-to-cash from 90 days which is the industry average to 4 minutes and are better tailored to the working capital needs of modern high-growth businesses. 

Trade Ledger’s co-founder, Martin McCann, and his team believe that transforming business lending operations through the Trade Ledger Lending Platform is the single biggest area of opportunity for commercial banks and financial services organisations to benefit from Open Banking in the near future. “There is a £1.2 trillion gap in credit that businesses need to optimise growth which is why we created this lend-tech”, explained McCann. “We believe that only by reimagining new types of credit services only possible with this lend-tech, can banks solve this massive business problem profitably and at scale globally. By leveraging open trade data via APIs alongside other enterprise-grade enabling technologies, financial institutions can drive significant operational efficiencies and product innovation within their internal operations and dramatically increase market share.”

“My co-founder Matt and I launched Trade Ledger in 2016 to improve the business customer’s experience in their financial supply chain, by helping banks re-imagine the entire process”, continued Martin McCann. “With the increasing threat of big technology firms like Google, Amazon and Alibaba bridging the gap between traditional financial services and the supply-chain eco-system, incumbent banks and lenders must start thinking about how they remain relevant. Trade Ledger is currently the only true platform in the world that can help them do this at a global scale in the business lending sector.”

George Davies, Partner at Hambro Perks added: “We are delighted to be backing Trade Ledger as Martin, Matt and the Trade Ledger team continue to develop market-leading tech that benefits businesses around the world. Hambro Perks is committed to supporting brilliant founders and teams that are building global businesses, and we believe that Trade Ledger has enormous global potential. We are very excited about Trade Ledger’s rapid growth and to support Martin and Matt as they tackle the barriers that have created such a vast undersupply of working capital for businesses across the globe.”

The Trade Ledger Platform provides a complete innovation layer that masks the clunky traditional corporate business banking environment and delivers an excellent consumer-like experience. Trade Ledger supports compliance with new regulatory requirements through aggregation and normalisation of better credit risk data whilst underpinning the wider commercialisation of open data and adoption of new banking business models to generate new revenue streams. The platform orchestrates value in the lending ecosystem by moving organisations from process-led engagement to an automated data-driven lending model.

About Trade Ledger

Trade Ledger (www.tradeledger.io) is the world’s first open banking lending platform that gives banks the ability to assess business lending risk in real-time. This will enable banks to address the £1.2 trillion of undersupply in trade finance lending globally while providing high-growth companies with the working capital needed to sustain growth.

About Hambro Perks

Hambro Perks (www.hambroperks.com)  is a London based venture firm that backs and builds leading technology companies. Founded by Dominic Perks and Rupert Hambro CBE, Hambro Perks invests at an early stage and helps companies to scale with capital and strategic support. The firm invests from both its permanent capital and Co-Investment EIS Fund that is open to high net worth investors and is soon to launch other funds. Hambro Perks has backed more than 40 businesses such as the digital pharmacy Echo, the geocoding system What3Words, and the Muslim matchmaking app Muzmatch.

Banking Circle Launched Payments Insight Paper: Latest research highlights the vital role of PSPs in increasing SME financial inclusion

London, 27th October 2019 – Money20/20 USA today played host to the launch of the latest Banking Circle insight paper. ‘Pay, Set, Match! Payment services for SMEs – Jump-starting a virtuous digital payment circle’, uncovers the challenges and opportunities for payment providers serving SMEs.

Banking Circle, the ground-breaking provider of business banking infrastructure, commissioned MagnaCarta Communications to produce a series of research papers investigating how financial institutions of all types can each play a role in increasing SME financial inclusion. This insight paper is the latest in the series, following the initial white paper which launched in May 2019 and a Banking Innovations insight paper published in September 2019.

Anders la Cour, Co-founder and Chief Executive Officer of Banking Circle commented: “Increasing financial inclusion is core to every Banking Circle solution we build. As such, we regularly speak to businesses of all sizes and types, working in all regions and industries, to gain invaluable insights into the current challenges and where we can tackle existing pain points. This Payments-focused insight paper includes input from a range of players in the market, each identifying key challenges and opportunities for payment providers.

“The unique insights we have gained in producing this paper are invaluable for Banking Circle but also for the wider industry and will help us work together to build an ecosystem of efficient and cost-effective solutions to meet the needs of real businesses. The current offering is not serving SMEs effectively enough, but meaningful change will only be possible when every player in the market knows and fulfils its specific role, working in collaboration and not competition with other providers.”

The full report, ‘Pay, Set, Match! Payment services for SMEs – Jump-starting a virtuous digital payment circle’, is available to download at bankingcircle.com/whitepapers and video interviews can be found here.

About Banking Circle

Banking Circle is a next-generation provider of mission-critical financial services infrastructure leading the rise of a super-correspondent banking network. Banking Circle empowers banks and financial tech businesses to support customers’ trading ambitions – domestic and global – whilst reducing risk and the operational cost of transactions. Banking Circle solutions are increasing financial inclusion by helping thousands of businesses transact across borders in a way that was previously not possible.

In 2013 Saxo Bank formed a new entity, Saxo Payments A/S, with the purpose of using Saxo Bank’s core capabilities within the non-cash payments market. In October 2015 the company launched the Banking Circle – its ground-breaking product for payments and FX to the Financial Tech industry. In October 2017, the company launched its new identity for Banking Circle, to reflect its position as a financial utility servicing Financial Tech businesses and banks. In September 2018, Banking Circle was acquired by EQT VIII and EQT Ventures, in partnership with Banking Circle’s founders.

Domiciled  in the European Union, Banking Circle specialises in providing global banking services including accounts, payments, lending and foreign exchange services to financial institutions, including FinTechs, banks, acquirers, payment service providers, FX brokers, money transfer businesses, e-wallets, and alternative payment providers.

For further information and interviews please contact the Banking Circle Press Office: 

Wendy Harrison/Lucy Wright – Harrison Sadler

T: 0208 977 9132 E: [email protected]