Deutsche Bank's Matherat Urges Rethink on Quarterly Reporting

(Bloomberg) -- U.S. President Donald Trump may have found an ally in his quest to lighten the burden of financial reporting for companies: Deutsche Bank AG.

Quarterly reporting deadlines fuel too much short-term thinking among banks, which may have helped fuel the financial crisis, the German lender’s chief regulatory officer, Sylvie Matherat, said in an interview. Trump recently reignited an old debate on Wall Street by asking the Securities and Exchange Commission to consider allowing publicly-listed companies to update investors only twice a year.

“We should discuss whether concentrating on quarterly results may lead to short-term thinking. We should think more long-term,” Matherat told the news agency dpa-AFX, without specifically endorsing Trump’s position.

Matherat echoed the post-crisis view that regulation before 2008 had created unhealthy incentives for lenders. However, she focused on “accounting rules that allowed banks to realize quick profits,” rather than banks’ own decisions to pay out profits immediately in cash bonuses.

Costly Lessons

Regulation since the crisis has forced banks to defer bonus payments and pay a greater share in stock. That reduces the incentive for individuals to pursue short-term profits without regard for the long-term impact on the bank. Deutsche Bank has paid heavily for employees who rigged interest rates, mis-sold mortgage-backed bonds and helped clients make suspicious transactions. Matherat said that the bank has now put most of its legal problems behind it.

While she seemed to agree with Trump’s position on reporting deadlines, Matherat differed from him in saying that a major roll-back of regulation was neither likely nor desirable.

“It was hard enough to introduce today’s rules,” she said. “Besides the fact that they have brought extra safety, no one who went through these painful processes wants to go through them all over again.”

To contact the reporter on this story: Geoffrey Smith in Frankfurt at gsmith325@bloomberg.net

To contact the editors responsible for this story: Dale Crofts at dcrofts@bloomberg.net, Ross Larsen, Jon Menon

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