It seems that Deutsche Bank do care about reputational damage. Yesterday, Josef Ackerman, head of the Bank had his contract renewed for another three years, in order to avoid the ‘reputational damage’ of an open recruitment process.

Speaking to the Financial Times Ackerman said: “In these tough times we didn’t want any more reputational damage (to candidates) through speculation…..Let’s say that if it were one person (who becomes CEO) another would be unhappy. That would be something we didn’t want to make into an issue during a financial crisis” Mr. Ackerman said.

By that rationale, we should have company dictatorships and government dictatorships. After all, if one party say, were to be elected, that would make another unhappy. And at times of crisis, we would not want that, would we?

Oh, and by the way, Deutshce Bank’s results in the quarter in which they hammered a small Russian micro-finance organisation ‘beat expectations’. “Pre-tax return on equity was 25 per cent” the bank said, meeting its pre-crisis target, and flouting the condemnation of Bishop Huber.  “Good fixed-income trading in its corporate and investment bank division saw net revenues rise to €4.9bn compared with €1.5bn in the first quarter of 2008.”

Deutsche Bank, according to its website, has ‘a passion to perform’. Visitors are invited to download its ‘empowering logo’ on to their computer monitors.  Its managers are empowered to extract from customers/clients a profit goal of 25% per annum.

In January this year (see my blog of that month) Bishop Wolfgan Huber, leader of the German Evangelical Church attacked the CEO of Deutsche Bank for this goal, arguing that given the role that bankers had played in bringing about the current crisis “Never again should a Deutsche Bank chief executive set a profit goal of 25 per cent.” Such goals drove up profit expectations to unsustainable levels and amounted to “a form of idolatry”, he said. “In the current circumstances, money has become a god.”

Josef Ackermann, Deutsche Bank’s CEO reacted angrily, dismissing the bishop’s remarks as ‘inappropriate’.

A couple of months later, on the 31st March 2009, at  a board meeting of one of Russia’s micro finance NGOs, one of their lenders, Deutsche Bank, used a ‘force majeure’ clause in their contract to announce, without further discussion, that they were changing the basis on which the loan interest was calculated.

This would rise from the Russian inter-bank rate to ‘their own rate’.   In other words, the cost of interest on the loan rose from 18% to a staggering 34.5%.

The micro-finance institution was told that if its manager refused to sign an amended contract, Deutsche Bank would call the loan in early.

If having signed, they wanted to repay early, this would trigger penalties, calculated on a basis that would remain a commercial secret, but would amount to about 3 million rubles.

Money is a god to this bank, and community micro-finance organisations in struggling Russia, nothing but the burnt offerings made as sacrifices to this god.

What is at risk now for Deutsche Bank, is not only the loan owed by the micro-finance institution, but also the bank’s reputation. Do they care?

Must comment on the outcome of the IMF meeting this last weekend.  You will recall that I was sceptical (in a Huffpost that argued that the Summit promised no ‘new world order’) about the sincerity of London G20 Summit promises of early April, spun artfully by Prime Minister Gordon Brown and his team.

Holed up in the aircraft hangar that is the Excel Centre, G20 leaders promised:

” to treble resources available to the IMF to $750 billion, to support a new SDR allocation of $250 billion, to support at least $100 billion of additional lending by the MDBs, to ensure $250 billion of support for trade finance, and to use the additional resources from agreed IMF gold sales for concessional finance for the poorest countries, constitute an additional $1.1 trillion programme of support to restore credit, growth and jobs in the world economy.”

The official report of the IMF meeting this last weekend notes that the International Finance and Monetary Committee  “backed moves to triple IMF lendable resources to $750 billion, initially through bilateral loans from member countries and later through an expanded and more flexible New Arrangements to Borrow (NAB).”

In other words, the commitments were ‘backed’ in much the same way as the G20 offered ‘to support’ the trebling of resources in London, But the commitments were not met.

Dispiriting stuff for the staff of the IMF, who were elated by the G20 decision and whose Managing Director, Mr. Strauss Khan declared ‘ the IMF is back’ six times in a press briefing after the London Summit, according to the Wall St. Journal. (27 April, 2009).

Apologies to regular readers of this blog for long absences. I blame the British Chancellor, the fine Spring weather and the ennui brought about by unrelentingly dismal economic news.  Better to remain silent, methinks.

However, enjoyed a moment of light relief last night, at the launch of Gillian Tett’s new book: ‘Fool’s Gold‘ at the Financial Times’ offices. She’s a star Gillian Tett, and over the years taught me all I know about the alphabet soup of CDOS, derivatives etc….It meant ploughing through the company report pages of the second half of the paper, but today, thankfully and rightfully she occupies a pedestal on the main pages.

Met several whistleblowers, including one that had been given very large sums of ‘fools gold’  by RBS to take the fraud he had uncovered, and to travel far, far away.  He was very jolly, very wealthy, but got bored sitting on his very own beachfront playing with his blackberry, he told me, and so was back consulting and advising on derivatives trading. Knowing that he would soon be paid very large sums to find another  very large house on a remote beach……..

Tuesday, 21st April.  Guardian round table: The CBI thinks the worst is over. Gordon Brown says Britain is overcoming the problems of recession. In budget week, we gauge the levels of optimism

Ann Pettifor “My rating of green shoots is at zero – if ideologically driven attacks on government spending by all political parties persist. Its striking this intense focus on the public sector deficit. Why so little mention of the backdrop? The historically unprecedented meltdown of private sector finances.

The savage Credit Crunch meant that demand from heavily indebted consumers and companies collapsed. The crisis forced thousands of companies and households into bankruptcy. The fall in consumption and industrial production delivered a massive shock to the economy, with still-rising job losses, loan defaults and bank failures.

With the collapse in demand from the private sector, where is demand to come from if not government? And as the weakening body of the economy gradually deflates, what private stimulus is to revive it?

Finally, what of that long-forgotten instrument, the multiplier? If government revives the deflating body of the economy – with spending on the Green New Deal – consumers and companies will perk up, and the multiplier will kick in. Government income and tax revenues rise automatically, to restore public finances to health.

In other words, as sure as night follows day, the government’s finances will recover – but only if, and when, the economy recovers.”

Ann Pettifor is executive director of ­Advocacy International

From The Guardian, Wednesday 22 April 2009

Today we face three of the greatest challenges of our time, global recession, energy security and the threat of catastrophic climate change. The only solution to this triple crunch is a low-carbon recovery. Millions of jobs could be created around the world, global warming emissions slashed and energy security increased. There is no choice between economic recovery and climate recovery – they are one and the same. But time is running out and we need bold measures at the heart of this year’s budget to build a low-carbon economy, ramp up energy efficiency and provide the renewables industry with urgently needed support to overcome immediate difficulties. To help provide the critical investment required, the government should set up and fund a Green Infrastructure Bank, backed by Green Bonds. This could leverage over £100bn in private finance to help create a dynamic low-carbon energy system.

This financial support must be used to drive programmes that ensure by 2020 every UK home is a low-carbon home, the UK meets its renewable targets and is a world leader in renewable energy manufacturing and deployment. It is time to rebuild and repower the UK.
Ed Matthew
Friends of the Earth
Philip Wolfe
Renewable Energy Association
Maria McCaffery
British Wind Energy Association
Graham Meeks
Combined Heat & Power Association
Howard Johns
Solar Trade Association
Paul King
UK Green Building Council
Andrew Simms
New Economics Foundation
John Sauven
Greenpeace
Shaun Spiers
Campaign to Protect Rural England
Jenny Saunders
National Energy Action
Ann Pettifor
Advocacy International
Neil Schofield
Worcester – Bosch Group
John Meadows
Schott UK Ltd
And 46 others

Posted by Maz Kessler 4th April 2009

Watch Ann on the IMF on Al Jazeera’s “People and Power” here.