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Finance Analysis Assignment Essay
This case describes the latest restructuring efforts by Deutsche Bank (DB). In July 2019, Christian Sewing, the new CEO of DB, announced a series of measures that included, among others, the elimination of global equity trading, the layoff of 18,000 employees, the creation of a “bad bank” to transfer non-core assets, and the suspension of dividends until 2022. The case describes key decisions a bank CEO must make when a bank needs to change course to return to profitability and growth. The case puts the students in the CEO’s shoes: What would you do and why? The case also describes key banking performance metrics (e.g., ROE, ROA) and other critical variables such as those reflecting capital health (Tier 1 ratio), as well as gives an overview of the bank business model and factors impacting bank profitability and value.
Q1 and Q2 refer to the data and period presented in the UVA/Darden Case
(Reminder: I will deduct points if you do not support your answer with empirical evidence/data from the Darden case. Make clear references to the case information, Figures, and Exhibits.)
Q1. Why has Sewing put forth yet another restructuring plan for DB? Do you agree with Sewing’s plan? Why or why not?
Q2. Deciding what to cut and how much to cut is not straightforward. What indicators is Sewing considering for his decision? What might be the repercussions of such a decision for DB?
[Q1 + Q2: 1.5 pages write-up max]
After reading the case, use Thomson Reuters or Bloomberg databases to collect updated data on DB. Specifically, please provide an Excel file with the following updates:
-Figure 1, Exhibit 4, Exhibit 6, Exhibit 7 (only P/TBV for DB and peers) for the years 2019, 2020, 2021, and 2022.
– Exhibit 3, only for the year 2022.
The Excel file must contain the underlying data you use to create the updated Figure 1, Exhibit 3, Exhibit 4, Exhibit 6, and Exhibit 7 (i.e., data + charts, not just a screenshot of the charts). Furthermore, indicate the source of the data you are using. Use Thomson Reuters, Bloomberg, or public company filings. Do NOT use WRDS, Yahoo Finance, Statist, or other sources. Note: updated numbers may be slightly different from the case, but they should not be substantially different. Trends should be similar. Report all financial variables in USD currency, paying close attention to the conversion exchange rates for non-US companies. If data is missing in Thomson Reuters or Bloomberg, please refer to public filings.
After you have updated the figures and exhibits, go to FT.com or WSJ.com and search for the latest news about DB. For instance, you can use the search function within the FT.com website and type the keywords liDeutschesche bank”.
Based on the updated figures, exhibits, and press research, answer the following questions:
3a) What do the historical financials tell us about Deutsche Bank’s profitability ratios in terms of ROA/ROE for the past three or four years? How does/did Deutsche Bank’s profitability compare to its peers? Is the restructuring plan working? Explain similarities/differences (pre vs. post-restructuring plans) and the financial data you downloaded to support your findings.
3b) What are the big issues Deutsche Bank is dealing with today? What can the bank’s management do/how is it performing? What would you advise (in comparison to management’s current performance) and why? Support your opinion and advice with YOUR data analysis.
3c) DB share price tumbled in the last month, especially after March 9, 2023, and then again after March 21. During that period, we saw the SVB blowup, the Credit Suisse acquisition by UBS, and the subsequent volatility around DB shares. What similarities and differences can you draw between the three banks (SVB, Credit Suisse, and DB)?
[Q3: 1.5 pages write-up max]
In answering the questions, your group must take a position and express an opinion. You must support your opinion with facts, theory, and empirical evidence. I want to see numbers! Be aware: Numbers alone do not tell a story. You must analyze the numbers and tell a story around them.
Please use the assigned readings when answering your questions. Do not use blogs, Wikipedia, Investopedia, etc. If you need to refer to an article, use only the FT, WSJ, or the Economist as sources for your research when expressing your opinion. I will deduct points if: 1) you do not support your answer with empirical evidence/data; and 2) you use sources such as blogs, Wikipedia, Investopedia, or press articles outside the FT, WS, J, or the Economist.
Your sources must be properly cited in the bibliography. Using someone else’s wording without quotation marks is considered plagiarism.
In general, I expect each answer to be supported by data analysis. Show your work and refer to the numbers (including the number page where they can be found) used in your analysis to support your opinion and statements.
Finance Analysis Assignment Essay