Is Deutsche Bank double-dealing?
Publicly, Deutsche Bank claims to be deliberating over the subject of food speculation. However, there are growing doubts that the bank will actually keep its promise to seriously examine the impact of its business practices. In its statement to a Bundestag committee, the chief economist of Deutsche Bank implied that the promised review had already been concluded – and that his institution considered the evidence of any harmful effects of speculation to be inapplicable. Is Deutsche Bank planning on proceeding with business as usual?
They have been the joint leaders of Deutsche Bank since June: Anshu Jain and Jürgen Fitschen. Since then the two CEOs have been working hard to paint a positive picture and improve the image of the financial institution. According to them the bank is aware of its responsibility for implementing a sustainable business model.
Deutsche Bank reacts to protests
Under their predecessor, Josef Ackermann, Deutsche Bank was heavily criticised on various issues, including its speculative investment in agricultural commodities. In the report “The Hunger-Makers” in October 2011, foodwatch published ample evidence that speculation in agricultural commodities leads to actual increases in food prices and causes hunger in poor regions of the world. In a protest campaign, foodwatch appealed directly to Josef Ackermann, calling on Deutsche Bank to withdraw from these practices. More than 63,000 people supported this demand.
And Deutsche Bank reacted to the protest: for the time being, it would issue no new exchange-traded investment products based on agricultural commodities; furthermore, the bank promised to release a report by the end of the year examining the impact of its investments on food prices.
Something quite different is going on behind closed doors
However, it remains to be seen how serious the bank really is about evaluating its activities. In a hearing of the low-profile Bundestag Committee on Economic Cooperation and Development, Germany’s largest bank was striking a very different note: there is “little convincing evidence for the claim that the increasing significance of agricultural financial products [leads to] price increases,” explained David Folkerts-Landau, chief economist of Deutsche Bank, at the meeting of experts for the Committee on Economic Cooperation and Development of the German Bundestag.
Is Deutsche Bank simply playing for time? Are they only pretending to take these claims seriously because this stance appears opportune in view of the public debate? The statement by Folkerts-Landaus seems to suggest this. The chief economist gave the impression that Deutsche Bank is not all that interested in a serious evaluation of its food speculation practices and that the financial institution simply intends to continue with business as usual.
However, even if Deutsche Bank feels that the existing evidence is still insufficient: the numerous indications that food speculation is contributing to hunger crises should be reason enough to react. Germany’s largest investment bank should refrain from commodities trading for precautionary reasons – especially as these investments do not even benefit the economy.
Other banks are further ahead
Other financial institutions are demonstrating how it can be done: they are not working on long studies or delaying their decisions but withdrawing – immediately – from food speculation in response to the wealth of evidence for its harmfulness. For example, in June, the Landesbank Baden-Württemberg (LBBW) declared its withdrawal from speculation in agricultural commodities. In April of this year, DekaBank (central asset manager of the German Savings Banks Organisation) announced that, by the end of the year, it would be ridding its portfolio of all speculation in important agricultural commodities offered in its own funds