Jim Armitage: German government must stop Deutsche Bank plunging furtherComments Off on Jim Armitage: German government must stop Deutsche Bank plunging further
If there’s one thing bank bosses, central bankers and governments should have learned through the financial crisis, it’s this: you can’t beat the markets.
Despite Deutsche Bank’s repeated efforts to reassure investors that it doesn’t need a bailout, that there’s nothing to see here, investors and counterparties are increasingly taking their own view: we don’t believe you.
It’s hardly surprising: even without Deutsche’s derivatives liabilities and looming multi-billion dollar fine from the US, investors just don’t trust European banks’ solvency claims.
Besides, who, hearing Deutsche’s declarations of strength, is not reminded of the identical statements from the banking giants in the days and weeks before they fell in 2007 and 2008?
Only a strong pledge of financial support from the German government will stem this damaging tide of speculation before it reaps serious damage on the real economy.
Reversal of fortune
Despite all the hullaballoo around Deutsche, there was only one topic exciting London’s mining community today – the sensational fall of investment tycoon Michael Cohen. Few rode the African commodities boom as high as the Och-Ziff London hedge fund boss, and, in US papers filed in the small hours of this morning, few can have suffered such a reverse.
As head of Och-Ziff’s European office, Cohen was one of the many fund managers tempted by the huge riches on offer in Africa. The deals he did in those heady days brought him hundreds of millions of dollars and a 930-acre Hampshire estate once home to the Duke of Wellington.
Last night, the US Securities and Exchange Commission gave an insight into how those deals came about, with corruption allegations against Och-Ziff that read like the script of a thriller.
“Och-Ziff Employee A, head of the European operation”, as the SEC puts it, either knew about, or was “wilfully blind” to a host of major bribes.
These included $3 million (£2.3 million) in bungs to high ranking Libyan officials through an agent; illicit payments to officials in multiple African countries; loans to diamond billionaire Dan Gertler used for bribery in the Democratic Republic of Congo (allegations Gertler denies); the list goes on.
Och-Ziff has struck a deferred prosecution deal and paid $400 million, but US authorities continue to investigate Cohen, who denies wrongdoing, and others.
Back in the day, after meeting one of Colonel Gaddafi’s sons in Vienna to discuss Libya’s oil wealth, Cohen declared: “I haven’t been this excited in a while.”
Today, it must be dread, not excitement, that Cohen feels.