Chart: The Epic Collapse of Deutsche Bank
Connect with us

Markets

Chart: The Epic Collapse of Deutsche Bank

Published

on

Chart: The Epic Collapse of Deutsche Bank

The Epic Collapse of Deutsche Bank [Chart]

A timeline showing the fall of one of Europe’s most iconic financial institutions

The Chart of the Week is a weekly Visual Capitalist feature on Fridays.

It’s been almost 10 years in the making, but the fate of one of Europe’s most important financial institutions appears to be sealed.

After a hard-hitting sequence of scandals, poor decisions, and unfortunate events, Frankfurt-based Deutsche Bank shares are now down -48% on the year to $12.60, which is a record-setting low.

Even more stunning is the long-term view of the German institution’s downward spiral.

With a modest $15.8 billion in market capitalization, shares of the 147-year-old company now trade for a paltry 8% of its peak price in May 2007.

The Beginning of the End

If the deaths of Lehman Brothers and Bear Stearns were quick and painless, the coming demise of Deutsche Bank has been long, drawn out, and painful.

In recent times, Deutsche Bank’s investment banking division has been among the largest in the world, comparable in size to Goldman Sachs, JP Morgan, Bank of America, and Citigroup. However, unlike those other names, Deutsche Bank has been walking wounded since the Financial Crisis, and the German bank has never been able to fully recover.

It’s ironic, because in 2009, the company’s CEO Josef Ackermann boldly proclaimed that Deutsche Bank had plenty of capital, and that it was weathering the crisis better than its competitors.

It turned out, however, that the bank was actually hiding $12 billion in losses to avoid a government bailout. Meanwhile, much of the money the bank did make during this turbulent time in the markets stemmed from the manipulation of Libor rates. Those “wins” were short-lived, since the eventual fine to end the Libor probe would be a record-setting $2.5 billion.

The bank finally had to admit that it actually needed more capital.

In 2013, it raised €3 billion with a rights issue, claiming that no additional funds would be needed. Then in 2014 the bank head-scratchingly proceeded to raise €1.5 billion, and after that, another €8 billion.

A Series of Unfortunate Events

In recent years, Deutsche Bank has desperately been trying to reinvent itself.

Having gone through multiple CEOs since the Financial Crisis, the latest attempt at reinvention involves a massive overhaul of operations and staff announced by co-CEO John Cryan in October 2015. The bank is now in the process of cutting 9,000 employees and ceasing operations in 10 countries. This is where our timeline of Deutsche Bank’s most recent woes begins – and the last six months, in particular, have been fast and furious.

Deutsche Bank started the year by announcing a record-setting loss in 2015 of €6.8 billion.

Cryan went on an immediate PR binge, proclaiming that the bank was “rock solid”. German Finance Minister Wolfgang Schäuble even went out of his way to say he had “no concerns” about Deutsche Bank.

Translation: things are in full-on crisis mode.

In the following weeks, here’s what happened:

  • May 16, 2016: Berenberg Bank warns that DB’s woes may be “insurmountable”, noting that DB is more than 40x levered.
  • June 2, 2016: Two ex-DB employees are charged in ongoing U.S. Libor probe for rigging interest rates. Meanwhile, the UK’s Financial Conduct Authority says there are at least 29 DB employees involved in the scandal.
  • June 23, 2016: Brexit decision hits DB hard. The bank is the largest European bank in London and receives 19% of its revenues from the UK.
  • June 29, 2016: IMF issues statement that “DB appears to be the most important net contributor to systemic risks”.
  • June 30, 2016: Federal Reserve announces that DB fails Fed stress test in US, due to “poor risk management and financial planning”.

Doesn’t sound “rock solid”, does it?

Now the real question: what happens to Deutsche Bank’s derivative book, which has a notional value of €52 trillion, if the bank is insolvent?

Subscribe to Visual Capitalist
Click for Comments

Markets

Visualizing S&P 500 Performance in 2022, by Sector

This video highlights S&P 500 performance through Q3. See how sectors and key companies have performed from Jan 1 to Sep 30, 2022.

Published

on

animated chart of stock returns on the S&P 500

Visualizing S&P 500 Performance in 2022, by Sector

Tracking indexes over the course of a year reveals a lot about market trends and sentiment. The S&P 500’s performance over the course of 2022 is a great example.

Throughout the year, inflation rates have remained high and interest rates have likewise been climbing around the world. Accompanied by the looming threat of a recession, some sectors have been hit harder than others.

The above visualization from Jan Varsava shows U.S. dividend-adjusted stock performance for each company in the S&P 500 index in 2022, from the start of the year through the end of September.

S&P 500 Performance (Jan 1 to Sep 30, 2022)

In 2022, the S&P 500 index dropped -23.9% through the end of September. Let’s take a look at some of the major trends from this year’s stock market.

S&P 500 Sector Performance2022 Q1–Q3
Energy+30.71%
Utilities-8.58%
Consumer Staples-13.52%
Health Care-14.15%
Industrials-21.72%
Financials-22.41%
Basic Materials-24.90%
Consumer Cyclical-30.32%
Real Estate-30.43%
Technology-31.93%
Communication Services-39.43%

Winners

The energy sector has been the noticeable standout and performed significantly well since the beginning of the year, as sanctions surrounding Russia impacted oil and gas supplies resulting in sharp price increases.

Top performing energy stocks as of September 30th, 2022 included Occidental Petroleum (OXY) up 112% year to date (YTD), and Marathon Petroleum (MPC) which rose 52% YTD.

Traditional defensive sectors such as healthcare, consumer staples, and utilities, although down for the year, also performed better than the overall index.

Losers

Growth stocks in both technology and communication services underperformed since the beginning of this year, as the value of future earnings were impacted by rising interest rates increasing the cost of capital.

Real estate, consumer cyclical (or consumer discretionary), and materials also underperformed compared to the overall index.

The trends are reflective of the fact that value stocks like energy and healthcare historically outperform growth stocks during periods of rising rates, though there are many varying factors that can alter performance.

Major Shifts in Q4

But as October has shown, the market is far from settled.

Lower-than-expected earnings and overspending caused Meta Platforms, Inc. (META) to drop 24% over five days and Amazon to drop 13%.

And the final impact of rising interest rates have yet to be fully felt, though indexes generally fare well in the year following. Since 1927, the average S&P 500 return sits at around 11.5% in the 12 months following peak inflation.

Continue Reading

Markets

Visualizing America’s Most Popular Fast Food Chains

Here’s a look at the most popular fast food chains in the U.S., based on their number of stores as of 2021.

Published

on

Visualizing America’s Most Popular Fast Food Chains

Fast food is big business in America. From national chains to regional specialties, the industry was worth $331.4 billion as of June 2022.

Which fast food brands are currently dominating this space? This graphic by Truman Du uses data from Quick Service Restaurant (QSR) Magazine to show the most popular fast food chains across America.

The Most Prevalent Fast Food Chains, by Store Count

Each year, QSR Magazine puts together a report that ranks America’s top 50 fast food chains. It uses a number of metrics to determine this, including total sales (which we’ve covered in a previous article), average-unit volume (AUVs), and growth figures.

For this graphic, Du zoomed in on a specific metric from the report—the number of stores that each fast food chain has across the country. Here are the top 50 chains, and the number of restaurants they each have across America:

RankBrandTotal U.S. Stores (2021)
1Subway21,147
2Starbucks15,450
3McDonald's13,438
4Dunkin'9,244
5Burger King7,105
6Taco Bell7,002
7Domino's6,560
8Pizza Hut6,548
9Wendy's5,938
10Dairy Queen4,339
11Little Caesars4,181
12KFC3,953
13Sonic Drive-in3,552
14Arby's3,409
15Papa Johns3,164
16Chipotle2,966
17Popeyes Louisiana Kitchen2,757
18Chick-Fil-A2,732
19Jimmy John's2,657
20Panda Express2,334
21Baskin-Robbins2,317
22Jack in the Box2,218
23Jersey Mike's2,100
24Panera Bread2,080
25Hardee's1,734
26Wingstop1,534
27Five Guys1,390
28Papa Murphy's1,240
29Firehouse Subs1,140
30Carl's Jr.1,058
31Tropical Smoothie Café1,039
32Marco's Pizza1,002
33Zaxby's908
34Church's Chicken892
35Whataburger873
36Culver's837
37Checkers / Rally's834
38Bojangles773
39Qdoba739
40Moe's659
41Tim Hortons637
42Del Taco600
43Raising Cane's567
44McAlister's Deli505
45El Pollo Loco481
46Freddy's Frozen Custard & Steakburgers420
47In-N-Out Burger370
48Krispy Kreme358
49White Castle349
50Shake Shack243

Subway takes first place with over 20,000 restaurants across the country—that’s more stores than all the other sandwich chains on the list put together.

Subway’s popularity is reflected in its sales figures, as well—in 2021, Subway generated about $9.4 billion in sales, about double its closest rival Arby’s.

Second on the list is Starbucks, with more than 15,000 stores across America. Despite a rough 2020, the coffee chain managed to turn things around in 2021, making more than $24 billion in sales that year.

The iconic burger joint McDonald’s comes in third, with more than 13,000 restaurants across the country. While the restaurant has fewer stores than Starbucks and Subway, it generated $46 billion in 2021 sales, which is more than Subway and Starbucks combined.

The “Stay in Your Lane” Curse

As the report shows, quick service restaurants are a popular dining option across America, and the successful ones have the potential to generate billions of dollars each year.

However, QSRs are not without their struggles. One difficulty facing fast food chains is the fact they’re often siloed into specific verticals—once a QSR establishes its niche, it can be difficult for that chain to branch out and successfully launch different menu items.

Take McDonald’s McPizza for example, which was launched in the mid 1980s and tested for a decade or so before being widely discontinued by 2000. Various factors contributed to its demise, but one major issue was the pizza’s relatively long cook-time of sixteen minutes.

Innovation in the Fast Food Industry

While fast food restaurants may have difficulty diversifying their menus, there’s still tons of innovation happening in the industry, especially when it comes to optimizing service and cutting wait times for customers.

For example, Starbucks’ mobile order and pay service, which allows customers to order from their phone, has grown 400% over the last five years. And in 2021, the McDonald’s app was downloaded 24 million times.

It’ll be interesting to see what changes in the next decade, as fast food companies continue to invest in their digital offers and tech support.

Continue Reading

Subscribe

Popular