Where were you 18 years ago? It’s not the easiest question to answer for most of us. Let’s be honest, 18 years is a pretty long time.
Of course, 2008 was a key date for the financial sector, and the global economy in general. If you were a hedge fund that survived that year and the doldrums that followed, you have probably made a lot of money since.
If you were a big bank that held on, possibly with government help, you faced a long road back to health. For many it hasn’t been an easy one.
The Irish banks struggled for years but are now mostly back in private ownership, with PTSB set to follow shortly. Yet they are relatively small lenders in largely one market, albeit with small operations overseas.
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Deutsche Bank has historically been one of the blue-blood banks of Europe. Yet since the financial crisis, it has been seen as the sick man of European banking. Until this week its shares hadn’t traded above the firm’s book value since that fateful year, 2008.
Strictly speaking, book value is just a company’s assets minus liabilities excluding shareholders’ equity. Yet, in truth, its value is as a measure of confidence in the business. If the market is optimistic about a company’s future, the ratio of share price to book value is likely to be higher.
The fact that Deutsche Bank’s shares have traded below book value for so long gives you some idea of the travails it has faced over the last decade and a half, much of them self-inflicted it should be said. At one stage its shares traded at barely a fifth of the measure, according to the Financial Times.
Like the Irish banks, time combined with higher ECB interest rates have boosted the German lender. Under chief executive Christian Sewing the firm has slashed its cost base and boosted efficiencies while pulling back from sectors that had been trendy in years past but had since become a drag on the firm’s core business.
The plan has worked so far, with the share price doubling in 2025. Sewing is nearly eight years into the job. Will he want to stay for much longer?
