Overdrawn: German Banking Giant Pays Out $35 Billion in Error

Deutsche Bank, Germany’s largest bank, accidently issued $35 billion to an international exchange that wasn’t owed.

The event is almost too staggering to comprehend. The market value of Deutsche bank itself is only $30 billion.

Representative from Deutsche Bank categorized the event as an “operational error.”

The colossal financial blunder occurred in late March 2018. The mistakenly issued payment of billions was shortly reversed.

“The error was identified within a matter of minutes, and then rectified,” said a Deutsche Bank spokesman via press release.

The incident occurred when Deutsche Bank was moving collateral funds to Deutsche Boerse AG’s Eurex, an international exchange with an operational focus on European derivatives.

It is the fourth-largest derivatives clearinghouse in the world.

Deutsche Bank’s $35 billion-dollar blunder temporarily increased Eurex’s collateral by more than half.

The spokesman for Deutsche Bank didn’t explain how the event happened or who was responsible, only that it wouldn’t happen again.

“We have rigorously reviewed the reasons why this error occurred and taken steps to prevent its recurrence,” said the spokesman.

Large banks like Deutsche Bank normally have redundant fail-safe systems in place to prevent such occurrences.

Toothless trap

In fact, this mistake got past an in-house fail-safe IT system known as a “bear trap.”

Dieter Hein, an analyst at Fairesearch, says the mistake is an indicator of Deutsche Bank’s management problems.

“A bank mistakenly making such a large transfer shows its controls aren’t working adequately, and it’s embarrassing,” said Hein.

“This kind of incident shows that the bank’s problems are so big that you can’t fix them immediately. Cryan failed,” continued Hein, referring to former Deutsche Bank CEO John Cryan.

Cryan lost his position on April 8 after less than three years on the job.

Deutsche Bank’s reputation and financial worth have took a hit in recent years, especially under Cryan. Shares of Deutsche bank have lost more than half of their value under his tenure.

COO and IT chief Kim Hammonds leaves the bank in May 2018 after her disparaging comments on the bank leaked to the press.

During an internal conference, Hammonds reportedly called Deutsche Bank “the most dysfunctional company” she’d ever worked for.

Surprisingly, Hammonds never disowned the comments. Meanwhile, the bank hasn’t reported an annual profit since 2014.

Deutsche Bank shares fell over 27% this year alone. The bank’s plan to fortify its solvency include eliminating tens of thousands of jobs and closing hundreds of branches.

Deutsche Bank insists it is investigating the $35 billion-dollar blunder.

“We have rigorously reviewed the reasons why this error occurred and taken steps to prevent its recurrence,” said the bank via press statement.

Iaccino: Bitcoin a Better Hedge Than Gold? Look at the Data

Bob Iaccino, editor of the Stock Think Tank, sees the relative stability of Bitcoin compared to gold as a sign that its legitimacy as a hedge is coming into view.

costco cost

The Dividend Stock That Belongs in Every Portfolio

If you are like me, then you are always looking for great companies that are on sale. What makes the company a bonus buy is when it also pays a

Bitcoin and Gold Slaying Stocks: Why Not Own Both?

The Bitcoin vs. gold battle rages on as the two are best-performing assets of 2020. The price of gold is up 26% this year, while Bitcoin has soared 87% —

Companies Pile On Debt. Big Headaches Later for Investors?

How have companies handled the cash crunch during this pandemic? I came across an insightful in-depth research report this past week that had a few interesting charts on this. See

Potential Options Payoff in Post-Covid China Rebound

The Chinese economy is starting to show signs that it is rebounding better than other economies around the world. China was the first country that had to battle the COVID-19

Retirement Income Tip: Buy High-Yielding Dividend Stocks

Imagine a scenario where you can make money while you sleep. Sounds too good to be true, right? Enter high-yielding dividend stocks. Now, there are lots of stocks in the

Beat the S&P 500 with These Specific Stocks

Today I'm going to briefly discuss a major error that most stock market participants make on a regular basis and ways in which you can substantially increase your stock returns.

Iaccino: Dollar Down, Stocks Higher, Plus PayPal Meets Bitcoin

A renewal of federal stimulus on top of monetary stimulus after the election is likely to support the stock market, says Bob Iaccino, editor of the Stock Think Tank. The

investor or pay off debt

Invest or Pay Off Debt? In a Pandemic, I’m a Stock Buyer

If you were to tell someone that you were putting any extra cash you had into the market instead of paying off debt, they might think you have lost your

bitcoin mass adoption

Bitcoin Mass Adoption Can’t Be Far Off — That Means Surging Demand

When you look at past technological developments — from the 19th century industrial revolution through the introduction of the telephone, personal computers, Internet, and smartphones — there is a typical

stocks overvalued

Is the Stock Market Overvalued? Not By This Measure

You many have heard the term “TINA” mentioned in various financial and investment commentaries in recent months. This is an acronym for “There is No Alternative.” It is built around a

clx options

Options Play: Take Advantage of Bearish Sentiment On Clorox (CLX)

We are in the middle of a global pandemic and one of the best weapons against the virus is cleaning surfaces with bleach. If we were to ask 100 people