The Finance Foundation
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President of the Finance Foundation

You push a button and 6 billion $ fly to an account somewhere. Deutsche Bank mishap is a warning for everybody.
October 21, 2015 , Michel Gabrysiak - Financial Markets

Have you ever received, unexpectedly, on your bank account a wire of 6 billion dollars? I have not. But it happens. Deutsche bank paid this phenomenal amount to an account of one of its clients. For nothing. They were not due.            

Thanks to the God of Finance, the money was sent bank the next day by the hedge fund which had received it. The extraordinary excuse of the bank is that the trade was processed by a junior member at the bank’s FOREX desk in London. His boss was on holiday. Does that mean that when the boss is on holiday banks just do anything? The new CEO of Deutsche Bank, John Cryan, is  changing the team. Many top people go, many new arrive, but that does not seem to be the problem. Obviously, even young traders are capable of doing the above simple manoeuvre: you push the button and 6 billion $ go away.

Needless to say that, shares in Deutsche Bank went a down. The story is an illustration of the enormous problems facing the banks nowadays. 

While Deutsche plays with billions, Morgan Stanley announces that 3rd quarter profits fall by -40%. Mr Gorman, the boss of Morgan Stanley says “we are in a difficult environment”. Barclays fights with the format of its investment bank. ETC ETC….

All this is true. But the question to be resolved by big banks is whether or not their global organisation requires such complexity. And technology is becoming so fast and astute, that the staff is not able to cope.

Bankers and regulators should consider a profound revolution in the processes and maybe, in the presence of the banks in too many markets with too many regulations and contradictory requirements. Maybe that, to be everywhere is beyond the capacity of those organisations?





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