Is a 2014 or 2015 Repeat for Deutsche Bank Possible?

Deutsche Bank

Deutsche Bank shares are under pressure once again. The Federal Reserve (FED) is again threatening to impose a heavy fine on the German bank. That has put shareholders in a bad mood. It’s just another negative headline that has recently cast an unflattering light on the firm. However, if you take a look at the long-term chart move, you might suspect that the negative news about the financial institution does not come as a complete surprise.

Insensitive Management Board

Everything should be all sunshine at Deutsche Bank. For the first time since 2014, the firm achieved an annual profit. However, the surplus did not come from the sources that were intended. Deutsche Bank CEO Sewing, in office since April 2018, has been restructuring the institution.

In addition to layoffs, the company must reduce its dependence on the capital market with its constant ups and downs. But it was precisely this area that – for the time being – contributed the largest share of profits.

It’s precisely this first surplus in six years that is causing further criticism from shareholders. The Deutsche Bank Board of Managing Directors didn’t allow itself to be deprived of the opportunity to increase its remuneration by +39% from €36 million to €50 million compared with the previous year based on business performance.

It took a good portion of insensitivity to “reward” oneself for five years of losses in the first place. And now, after a (so far) unique positive business performance, these gentlemen are taking such a “sip from the bottle.”

I don’t know how you see it, but I find this a profoundly immoral process, especially against the background of the economic development in 2020. But hey, Deutsche Bank has hardly put its foot in its mouth regarding scandals, criminal acts, and resulting court cases and fines in the past two decades.

Now the Fed is once again threatening reprisals. The U.S. central bank feels that implementing the compliance measures it has imposed is not swift enough. In addition to continued violations, the bank’s measures to prevent money laundering in the USA are also insufficient.

Should We Have Expected Headwinds?

When you see the longer-term chart of the Deutsche Bank share, you may feel the same as I do. Yet, somehow, negative headlines in such large numbers no longer come as a surprise.

Since its all-time high of €92.06 just over 13 years ago, the bank’s shares have been on a downward trend. The previous record low was set in last year’s crash at €4.45.

At this point, Deutsche Bank shareholders had lost a whopping -95% of their capital investment since 2008. Although the share is currently trading almost three times as high, the loss in the past 13 years still amounts to nearly -87%.

The massive rise from the March low in 2020 has recently brought the share price precisely to the downward trend established 13 years ago. In 2014 and 2015, such a docking at the trend line was followed by a massive decline.

After the solid upward movement of the last 14 months, a timely break of the downward trendline seems very unlikely.

Your Takeaway

When the quest for power becomes too great, the danger of drifting into criminal machinations is high. There are numerous examples of this in history. In addition to Deutsche Bank, the Volkswagen car company also sought global domination here in Germany a few years ago. But, unfortunately, that didn’t end well.

But somehow, the German financial institution cannot get out of the negative headlines – for which, of course, they are responsible. And that despite a first annual profit since 2014.

It takes a fair amount of chutzpah, and not just for this reason, to give oneself a +39% increase in executive board compensation to €50 million in times of crisis when many people fear for their jobs and their financial survival.

Again accusations, like now again from the U.S. Federal Reserve, are wafting through the world. They accuse Deutsche Bank of not playing by the rules, for example, about money laundering.

However, the chart technique indicates that at the recently reached price level, increased headwinds were to be expected: Deutsche Bank’s share price had risen exactly to the downward trend line that has existed since 2008. From a chart perspective, the bank’s shareholders should now prepare for a downward trend in the share price, as was already the case in 2014 and 2015.

Dr. Gregor Bauer
Dr. Gregor Bauer
Dr. Gregor Bauer credits his trading success to combining fundamental aspects of a trade with expert technical analysis. A Certified Financial Technician from the International Federation of Technical Analysts (IFTA), he’s rated as one of Germany’s top 300 economic experts.
Dr. Gregor Bauer
Dr. Gregor Bauer
Dr. Gregor Bauer credits his trading success to combining fundamental aspects of a trade with expert technical analysis. A Certified Financial Technician from the International Federation of Technical Analysts (IFTA), he’s rated as one of Germany’s top 300 economic experts.

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