European banks on the run, while China’s talent gets stronger in October

Financial Well-being

The European banking giant Deutsche Bank has fallen on hard times once again. The company’s stock price took an 8% hit at the end of October after it reported an €832 million loss for the third quarter of 2019, well below the €778 million loss analysts expected. While Deutsche Bank experienced a 13% decrease in revenues on the quarter, its Wall Street counterparts saw an average 11% gain of their own.

Still, executives at the company claim that these losses are to be expected, and everything is going according to plan:

“Our results in the quarter are entirely in line with our plans. We are executing, I think, well against the strategic changes we announced in the summer,” James von Moltke, chief financial officer at Deutsche Bank, told CNBC’s Annette Weisbach.

He added: “Our net loss is a little better than our internal planning and our capital ratio at 13.4% stable quarter-on-quarter demonstrates what we set out.”

With only 1,500 of an estimated 18,000 layoffs coming in the most recent quarter, many wonder if Deutsche Bank’s biggest problems still lie ahead.

Deutsche Bank isn’t the only European financial institution that’s facing major struggles. HSBC also had a third-quarter to forget, with net profits falling by 24%. As a result, HSBC CFO Ewen Stevenson announced the company will undergo major structural changes in business areas which are faltering:

European banks

“Returns are very, very weak across both of those businesses. We need to get those returns up, we haven’t yet sized what that means in terms of the restructuring,” he said, adding the bank is also trying to reduce complexity in its group operating structure to achieve some efficiency savings.

“We’ll come back to the market as part of our full-year results in February but, you should expect us to take some material action against those parts of our businesses,” Stevenson said.

The company was already reeling after a tumultuous summer. CEO John Flint left the company less than 2-years into the job, and the bank announced it would have to lay-off up to 2% of its workforce which totals more than 230,000 employees.

Recent voting in the German state of Thuringia showed how both extreme parties on both the left and right are gaining momentum in Europe. The state’s socialist Left Party won 31% of the vote while its far-right counterpart Alternative for Germany (AfD) garnered 23% of the vote, double its previous result.

This trend of extremism worries political experts who fear centrist coalition governments are a thing of the past:

Socialist Left Party Germany

“If this happens in one regional election, you can count it as an isolated incident,” Dr. Hendrik Träger, a lecturer in German and European party politics at the University of Leipzig, told DW. “But when this happens in three regional elections, it’s a clear sign of a nationwide trend.”

While the United States is focusing on toughening its stance on immigration, China is taking advantage of a growing talent pool in the technology sector. US President Donald Trump is doing his best to curb Chinese involvement in US tech companies, but has been unable to stop the influx of talent to China.

Nowhere is this more true than in the field of artificial intelligence, says Ning Tao, president and partner of one of China’s leading AI-focused venture capital businesses, Sinovation Ventures:

Artificial intelligence

Tao said that as a US government crackdown on foreign influence spilled into academia, taking a toll on Chinese or Chinese-American researchers, China could benefit from Trump’s anti-immigration policy.

“While the US is driving talent away, it is the perfect time for us to race to bring them back to China.”

The Chinese government wants world leadership in artificial intelligence by 2030, when the domestic industry is forecast to be worth about US$150 billion.

Many highly educated foreign workers in America are opting to leave the country once their work visa expires, acknowledging the difficulty of obtaining citizenship in the United States in the current political climate.

Uber is expanding itself well outside of its ride-sharing application and into a global technology giant. The company announced its newest division, Uber Money, which will give its 4 million drivers around the world access to a mobile wallet and bank account to process ride payments immediately.

Peter Hazlehurst who will head the new division, sees this as an opportunity to introduce Uber as a reliable financial services company:


“We wanted to help everybody understand that there’s a new part of Uber that’s focused on financial services and that has a mission of giving people access to the type of financial services they were excluded from,” Hazlehurst said in a phone interview.

This effort comes two years after Uber announced a branded credit card that failed to gain much traction in the market. The company plans to reintroduce the credit card within its new division in the near future, hoping to gain more momentum in the financial services sector.