Company Results and Future Expectations: Deutsche Bank
Recent history and performanceDeustche Bank is a worldwide financial institution that is rooted and has a major base in Germany. Its headquarters are found at Frankfurt. The bank’s formation took place in 1870 amidst economic turbulence. It is at this period in time when socio- economic transformation was radically taking place and industrialization was at the helm. The major driving force to its formation was the dire financial needs that the industries demonstrated. The other aim of forming Deustche bank was to facilitate effective international and foreign trade between Germany and the rest of the world and to engage in the banking business of almost all kinds (Jones, 1994). At the time of this bank’s formation, Germans foreign trade was as well on the rise.
The bankers in Germany also became open minded and welcomed any innovative idea which helped propel the growth of the banking industry (Jones, 1994). The bank also made history as the last bank to be issued with the banking license at that state of events and its license stressed much on foreign trade as Germany extended its wings to trade with the rest of the world (Jones, 1994). Up to this moment, the bank has had a very wide coverage throughout the world, its expansion strategy started locally with Bremen and Hamburg in the year1871 and 72. It then spread to the Far East and established a branch in Shangai China and later in London UK. The bank also has major branches in North and South America in cities like New York with financial centers in major financial centers of the world; New York, Dubai, Tokyo, Singapore, Mumbai and others. With over 75 branches around the world spreading majorly in European countries, Asia and to an extent the emerging markets, the bank is the best employer with over 120,000 employees worldwide (Jones, 1994).Deustche bank as a modern bank brags to be the largest dealer in the Forex market holding a market share of around 22% of the total market share. It is listed both in Frankfurt Stock market (FWD) and in the New York Stock Exchange (NYSE) market. Its penetrative tool in the foreign countries included investment projects in such countries like railroad projects in the USA (Limited, 2008). It extends its services to the corporate, institutions and even individual business investors by offering them a range of its financial products and services. The services and products offered by the bank ranges from transacting mergers and acquisition between companies, offers lucrative risk management programs and plans through financial derivatives. It also provides both wealth and funds management for interested individuals and many other products (Lhabitant, 2006).
The bank’s strength also lies in its structure of management, which is definite, exact, and precise. The structure is well planned and executed; it flows right from the Chief Executive Officer right to the supervisory board. From which we go directly to the managers of various branches abroad who report directly to the head office in Frankfurt (Johnston, 2000). The current CEO since 2002 is Josef Ackermann who is of the Swiss origin and a banker by profession. Upon the provision of the joint board system as prescribed by the law for the German stock corporation, the bank welcomed Ackermann’s acceptance to head the bank for the next three years until 2013 and would allow it business to be headed by two CEO’s in line with the new regulations from when the current CEO retires. This is gain in line with the fears that the bank has of it dropping most of its Germans operation and even start engaging in even more risky business ventures (Davis, 2009). The current position of Deustche bank in the industry is that it is the best in terms of expansion growth, operations and management policies, corporate governance as well as provision of products and services. This is contributed to a lot by the strong foundation upon which it is based and exemplary, effective and quality leadership exerted by Josef Ackermann (Bank, 1989).
Current performance of the Bank .The performance of any financial institution such as a bank is looked at with respect to it capital base, asset holding which by extent is used to asses liquidity. Performance is also measured through the pricing of shares of the company in the stock market and the market share is also a measure (Limited, 2008). Deustche bank as have been witnessed holds over 21% of the market share in the banking and financial market operations worldwide. This shows its operating so strongly and this can even steel for us the gist of the performance of the other aspects of performance. The enormous growth in market share has been a positive contribution of the efficient and most modern technology applied by the bank where shares are directly registered to the stock exchanges (Johnston, 2000). This is despite current stiff regulatory frameworks of financial markets of member countries like those of the NYSE. The number of the banks shareholders has consistently been on the rise since with the current hitting a record high of over 54,000 shareholders. Majority of these shareholders are private individuals with majority of them joining in the onset of capital increase. Though majorities are private investors, it is still in record that the number declined by about 25% of private shareholding with that of the corporate investors being on the rise by about 75%. Major investors were from Germany and Europe with those from the United States going down by about 13% of shareholding. Access to Deustche bank shares has no great burrier and they are freely floated to be of reach and be acquired easily (WetFeet, 2009). The bank has of recent floated its shares for subscription with lots of restrictions from every member country. It also approved a takeover bid for post bank. Due to its exemplary performance in the year 2010, the bank was named the International Financial Review Bank of the year (Davis, 2009). This is partly contributed to by the fact that it also accepted to go global after a long period of seclusion.
Expected future performance .The bank based on its strategic management objects is projected to continue experiencing constant vertical growth in all its aspects of business operations. It is expected to widen its markets most so in the emerging markets in the developing world like in Africa where it is hardly felt. This is anticipated to even widen its market share and growth of a larger market base (Jones, 1994). Currently, Deustche bank is a global institution in terms of profitability. The bank offers first class worldwide banking services and its management works round the clock through its innovation and product provision services to offer even up to standard services, which meets the current technological standards (Davis, 2009). The bank is also offering it clients products that meets international standards most so those for mergers and acquisition and investment banking, this is to enable its clients access the services from any part of the world conveniently. Capital growth will also intensify its growth given the adoption new issue policies at fair prices of as low as $33.1 per share. The bank, also the leading in foreign exchange transactions also aspires to maintain on the hold of this (Bank, 1989).
Deustche bank is offering efficient corporate governance through appropriate management styles. This is in line with the international requirements and standards. This is meant to further its identity and cut its edge in the international market (Limited, 2008). The management of the bank is so responsible and employs value- driven management as some of its corporate governance tools. Its key elements of operation revolves around creation of good relations, appropriate compensation to its management and employees, effective corporation between its two boards as well as early reporting. It holds transparency as key to its doors to success (Johnston, 2000).
The operations of Deustche bank are in line with all the laws of the land i.e. German Stock Corporation Act and German Corporate Governance Act of Germany. It also adheres to the international laws such as US Capital Market Laws since it operates in the NYSE. All the above Governance codes have led to its smooth operations and hence prosperity.
Investment assessment. Performance of any company is depicted by the return on its assets, the prices of its share and the types of its investment assets and the risks involved. The asset prices of Deustche bank had been on a consistent rise returns on its assets also high up to a high of 72.04. The stocks of the company, which is composed of high value shares and bonds, are also selling well in the securities market with very little risks involved. Deustches total returns compared to those of the market have proved excellence (Lhabitant, 2006). All these are a proof that Deustche bank is a company worth investing in since any investor is assured of the security of their investments and high returns through dividend payments.
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Lhabitant, F.-S. (2006). Handbook of hedge funds. West Sussex: John Wiley & Sons. Print
Limited, E. C. (2008). Business Knowledge for It in Prime Brokerage. London: Essvale Corporation Limited. Print.
WetFeet. (2009). Deutsche Bank in Asia 2009. Philadelphia: WETFEET, INC. Print.