All Articles Finance Modern Money While You Were Working - March 2

While You Were Working – March 2

Deutsche Bank details rough European banking scene, Harvard ranks overpaid CEOs, Caterpillar has a bad day and Netflix spoofs SNAP

3 min read

Modern Money

Snap. Inc

Snap. Inc

Deutsche Bank confirmed European banks are glad to see 2016 in the rear-view mirror

I wrote Tuesday about how US banks enjoyed a banner 2016 (record earnings, regulatory compliance, etc) and did so despite much hand-wringing about regulatory hurdles, political uncertainty and fines in the tens of billions of dollars. That is fantastic for the US banking sector. Banks in Europe, however, weren’t so fortunate. Deutsche Bank released a note about the performance of Europe’s 20 largest banks in the year of Brexit and Trump; and the results were pretty bleak:

“On the revenue side, all major components declined year-over-year at the 20 largest institutions. Interest income was helped by modest loan growth. Lending to companies was slightly positive, and loans to households were up 2% in the euro area. Interest margins, however, contracted by about 7% due to the further fall in the overall rates level. In total, this led to a significant drop in net interest income of 5%.”

Revenue dropping on every front can’t be good. The note goes on to highlight one dagger data point:

“The most spectacular figure, however, came neither from balance sheets nor the P&L: for the first time since the financial crisis, European banks on aggregate did not manage to strengthen their capital levels in the past 12 months, in spite of de-risking.”

A bank’s capital levels are darn important to just about all financial regulators. This kind of report might even spark more speculation about US banks acquiring European lenders. However, it also begs the question: Why would a US bank want to acquire a European lender exhibiting such poor results?

Harvard ranked the most overpaid CEOs

The Harvard Law School Forum on Corporate Governance and Financial Regulation released its annual list of the 100 Most Overpaid CEOs. The list is part of a larger report on corporate governance and how CEO pay correlates to worker pay, company performance, etc. There are loads of financial services CEOs on the list, but I have to say that considering the year Wells Fargo had and the fact that the fake account scandal ushered John Stumpf into a speedy retirement, it’s surprising to see he only placed #78 on the list. What the heck are the other 77 CEOs doing to make them more overpaid than Stumpf?

Oh Boeing

Boeing hosted a Trump “campaign event” a couple weeks ago. Since then, it has invested $25 million to open a new factory in the UK and cut 1,800 jobs in Seattle. But don’t worry America, Boeing’s stock is killing it.

Is SNAP the tech startup spoofed in the Netflix series Flaked?

I don’t think anyone really knows if SNAP will become an earnings great or an earnings ghost (see what I did there?). However, I am just glad its IPO brought this story to my attention. I recently enjoyed the Netflix show Flaked. It’s a quirky show starring Will Arnett and features a major plot line about a tech startup billionaire who looks to invade Venice, California, and co-opt its coolness. The billionaire (Evan Spiegel?) is played brilliantly by Christopher Mintz-Plasse; especially the scene that features “Boxercising.” The show highlights a grassroots effort called “SaVenice” that tries to keep the tech startup at bay, which means I had to laugh when I saw the second photo in the Buzzfeed piece.

WYWW Appetizers

  • Carl Icahn knows working for free pays
  • Apparently, repealing Dodd-Frank is kinda, sort of, a wee bit tricky
  • Subprime lending for for puppies
  • Luis Enrique is leaving FC Barcelona
  • Goldman Sachs bankers fret about little things like their mobile data plans