TASK 1: Deutsche Bank's business model and financial performance The case study "Deutsche Bank and the Road to Basel III" provides an excellent overview of the history of Deutsche Bank and its rise to become one of the largest global banks in the world. Indeed, Deutsche Bank is one of the global financial institutions described by the Financial Stability Forum (FSB), a global grouping of regulators, as a "global, systemically important bank". Published in mid-2013, the case study charted the evolution of Deutsche Bank's business model and its financial performance over the period 2002 to 2012. The case begins by focusing on the uncertainty about Deutsche Bank's future prospects back in 2012 and how the newly appointed coCEOs Jurgen Fitschen and Anshu Jain who succeeded the legendary Josef Ackermann in May 2012, would navigate the bank against the headwinds of tough market conditions and regulatory hurdles under the new Basel III. QUESTIONS FOR TASK 1: (1) How has the orientation of Deutsche Bank changed over time in terms of business segments and global nature? Why? Do you agree with its strategy? Support and show evidence for your response by using the financial data provided in the case study. (25% of total mark) (2) What do the historical financials in the case study tell us about Deutsche Bank's profitability ratios in terms of ROA/ROE? Discuss these profitability ratios and assess their implications for the strategic options facing the co-CEOs in 2012 and in present day Deutsche Bank under current new CEO John Cryan. (Hint: Examine these questions in the context of the challenging capital market conditions post-GFC and the Basel III requirements.) (25% of total mark) Theory & Practice Group Assignment (Instructions) FINA3304/2016/5 TASK 2: Future Banking Model In the case study, it was mentioned that Anshu Jain, co-CEO of Deutsche Bank at the time of writing of the case study, said publicly that the "universal banking model is likely to prevail over 'pure play' investment banking" and was in the "best interests of Germany." He also said in a speech that "global universal banking was in Deutsche Bank's DNA from the very beginning". Universal banking was a business model embraced by financial institutions in the 1990s as a response to the globalization of financial markets to provide a "one stop shop" to their customers. In 1999, the US finally repealed its Glass-Steagall Act which banned universal banks and started to allow American banks to merge their investment and commercial banking businesses. QUESTION FOR TASK 2: (1) The universal banking model has recently been the subject of much debate and been blamed for what happened in the global financial crisis. Some have argued that universal banks enjoy an unfair advantage given their "too big to fail" status. What was the impetus for banks to embrace the model in the 1990s? Discuss the challenges facing the universal banking model and factors arguing against this model of banking. (25% of total mark) TASK 3: Convertible Bonds In response to the higher capital requirements under BASEL III, banks have responded by issuing a type of convertible bond which qualify as Additional Tier 1 Capital. Deutsche Bank is one of these banks. These bonds, called Cocos, for short, invented to help a bank avoid a calamity, are now turning out to be problematic for the banks. QUESTION FOR TASK 3: Explain how these bonds work and what are the issues surrounding th