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Originally Posted by BooLoo
I'm invested in DB for quite a part of my money. I would go along with saying that there are only very few people who can really evaluate the big financials but then you'd better ignore every single one of them in your investments. But I'd also say that in the long run DB shares definitily have upside potential.
First of all after, the financial crisis and the fall of Commerzbank to a kind of minor international bank the DB is kind of the only german bank with great international influence and it's quite important to german politics (for example there was quite a bit of discussion before non-German-speaking Anshu Jain was made CEO last year). So for me there's little risk of bankruptcy here.
One might also take in consideration that they were one of the very few big institutes who didn't need financial help from the state during the crisis but used the time to acquire both german banks "Postbank" and "Sal. Oppenheim".
I think a few of the main reasons for their present valuation ist their low dividend yield compared to other financial institutes or their own past dividends as well as a big amount of legal trouble they are in right now.
As for the dividend, they had kept it low to increase their Tier 1 capital quota to meet new Basel requirements and as they had to reserve money for legal settlements. The LIBOR case for example. They might even end up paying about 1.3B€ to heirs of former german TV-tycoon Leo Kirch if they are ruled responsible for the bankruptcy of Premiere TV-Station which was more than 10 years ago. There are quite a few more, but just to give an idea.
I'd also say they seem undervalued, as in a few years they will have sorted out most of the legal stuff and might increase dividend again. Most of analyses I've read go along with that, but as Ahnuld said there's really not that many people who can really value those banks. But it would seem like a good investment to me if I weren't already invested that strongly.
Just to back it up with some numbers, litigation reserves already amount to €3bn, with the Kirch case for example being still kind of unbiased as to the result and worth up to 1.3bn.
Furthermore the acquisitions of Sal. Oppenheim and Postbank made the number of employers jump from about 77k in '09 to 102k in 2010, with declining numbers over the last few years as synergies are being utilized. I think those two really diversified the company, as they were looking to get more independent from the results of the investment department of the bank. Particularly with the Postbank being the biggest retail bank in germany with about 14.5mil customers. Add to that the new CEO-Duo of Fitschen and Jain taking over in 2012 and I think it's fair to say that the company is in a phase of reorganization, which I think will likely give them an edge over many other financial institutes.
For me DB is really a long term investment, I don't believe in huge gains until the whole eurozone crisis is somehow fixed, but if they are still around after, I think they will be in good shape compared to others.