What's going on?

Deutsche Bank, one of Europe�s biggest banks, told investors on Friday that it lost much more money than expected in 2017 � and its stock plunged 6%. Autsch.

What does this mean?

CEO John Cryan took the reins at Deutsche in the summer of 2015 and promised to turn the struggling bank around � but tackling what one major investor calls �decades of mismanagement� has proven to be a tough task. For one, Deutsche is heavily reliant on revenue from its investment banking division (e.g. trading stocks) and 2017�s calm trading environment meant clients weren�t tempted to trade as much, thereby limiting revenue.


But Deutsche�s problems may run deeper as investors currently value its stock at a very low level relative to the amount of �assets� it owns (which include loans it has made). Investors are effectively saying they don�t think Deutsche will get repaid as much as Deutsche thinks it will, which, if correct, would likely cause even more losses and further devalue its shares.

Why should I care?

The bigger picture: Deutsche has not joined the banker’s party.

Most banks have had a very strong past 18 months: as interest rates have gone up, they have been able to charge more for loans, pumping up their profits and share prices. But Deutsche�s continued losses, and concerns over the value of its assets, have helped push its stock down 25% over the past year.


For the stock: High bonuses are a potentially damaging PR problem.

Despite losing about �500 million (~$620 million) in 2017, Deutsche agreed to pay out over �1 billion (~$1.24 billion) in bonuses to its staff. Deutsche says this was necessary to stop high-flying investment bankers from jumping ship and joining rival banks, thus decimating Deutsche�s future business prospects. But the decision is playing out poorly in Deutsche�s home market of Germany and contributing to investors� angst.