IFID End of Term Exam SEMESTER II
39th Graduating class
Duration : 1H30
Why Deutsche resists national champion status
1-Ever since Deutsche Bank discovered that operating
abroad - particularly in investment banking - was more
profitable than much of its rootand-branch business back
home, Germany's biggest bank has had a difficult
relationship with the local establishment. For a nation that
demands patriotism from its big companies, Deutsche's
announcement recently that it would be laying off
6,400people - even though it had made record profits of
€2.5bn - was hard to swallow.
2- Politicians of all parties have accused Josef Ackermann,
the bank's affable Swiss-born chief executive, of
'immorality' for putting profits before jobs. Yet politicians -
especially those prep1uing for important regional elections
against a background of 5 a record 5 million unemployed -
were always likely to criticise Deutsche over its job cuts.
For Deutsche, the real trouble is that the German social
ethos fits uncomfortably with global shareholder value
principles.
3- Deutsche might have made record profits last year. But,
when compared with its global peer group, a pre-tax return
on equity of 19 per cent and a market capitalisation of
barely €35bnput it outside the top 20 - even though, in
terms of assets, revenues and investment-bank league-table
performance, it 2 3 is a top-ten operator. For Mr
Ackermann, it is the age-old tussle between what Germany
demands and what investors and the analyst community
want to 6 hear - namely that he is undertaking serious
measures to reach his goal of a 25per cent pretax return on
equity, on a par with USrivals.
4-'Deutsche Bank is supposed to be a national champion,'
says David Williams, an analyst at Morgan Stanley in
London. 'The trouble is that the definition of a national
champion differs inside and outside Germany. Deutsche can
only really play in the top tier if its profits, share price and
market capitalisation are comparable with the best. But
inside Germany, aU that matters is for a bank to have a big
balance sheet, 7 employ a lot of people and lend money to
anyone who wants it.'
1/5
5-That kind of tension does not only apply to Deutsche
Bank, but to any company that pits itself against an
international peer group and puts pressure on jobs while
being highly profitable. For Deutsche, though, it is more
acute, analysts believe. Siemens last year extracted longer
hours for no extra pay from several thousand staff in its
mobile and networks operations, while BASF said in
November it would cut 3,600 jobs despite recording
forecast-beating profits. Yet both Siemens and BASFappear
to have avoided apolitical onslaught by being open to
compromise. Siemens abandoned initial plans to shift up to
5,000jobs overseas, and BASF promised to avoid
compulsory redundancies.
6-Deutsche's difficult relationship with the German
establishment is long-standing. Despite carrying its
nationality in its name, it no longer regards itself as a
German bank, and these days employs more people - and
makes more money - abroad than at home. To compound
matters, Mr Ackermann is not even German. Despite
reasonable links to government, advisers say Mr
Ackermann is obliged to maintain a degree of distance in
his political and corporate networking in order to avoid
being drawn into unprofitable patriotic business.
7-Morgan Stanley believes the political outcry over the
Deutsche jobs saga carries a resonant message. 'This kind of
political interference is derailing capitalism in Germany,'
says Mr Williams. 'It is social engineering. And it is
delaying much-needed consolidation in German banking. It
is a big deterrent for potential acquirers from abroad.' For
Deutsche, in particular, senior managers believe the debacle
has exacerbated the 'German discount' attached to the share
price. That is the last thing Mr Ackermann needs as he tries
to play catch-up with his international rivals.
FINANCIAL TIMES
 I- READING COMPREHENSION ( 8 marks)

1- Read the article and complete the following summary with words from the text:
( you can use between ONE and THREE words) ( 2 marks)

Deutsche Bank is Germany’s biggest bank, but there are increasing tensions between
the expectations of German society and the bank’s strategy to become a leading player
in international banking. German politicians are accusing the bank of giving more
priority to making profits rather than saving jobs.
Although the bank made record profits last year, it is not one of the top twenty
investment banks in the world in terms of share value. For this reason, Joseph
Ackermann, Deutsche’s CEO, needs to increase pre-tax return on equity from 19% to
25% in order to compete with US banks

2- Find words and expressions in paragraphs 3 and 4 which mean the following ( 1.5
marks)
a- Market capitalisation : capital that a company has from its share.
b- Assets : things belonging to a business that have value or the power to earn money
c- Balance sheet : document showing a company’s financial position and wealth .

3- Read paragraph 5.Which statements refer to : - Siemens / BASF / Both of them/

neither ( no one of them). Tick the correct case. ( 3 marks)

Statements Siemen BASF Both Neither

s
-Increased working hours without increasing salaries in some X
divisions
-introduced longer working hours throughout the company. X
-made bigger profits than expected last year X
-planned to reduce the workforce in Germany. X
-received the same strong criticism from politicians as Deutsch X
-Will transfer about 5.000 jobs outside Germany. X
-Decide not to move thousands of jobs to other countries X
-Agreed to ask which staff want to leave their jobs in return for a X
payment.

4- Focus on paragraphs 6 and 7 and say whether the following statements are true or
false .Justify with details from the text ( 1.5 marks)

2/5
 - Mr Ackermann’s Nationality has helped improve the bank’s relationship with
TRUE the establishment.
……………………………………………………………………………
- The angry protests about Deutsche’s job cuts has a deeper significance in
FALSE German Business.
……………………………………………………………………………………

TRUE -Mr Wiliams believes that the government is interrupting plans to make German
banks stronger
……………………………………………………………………………………………

II- LANGUAGE ( 8 marks)

1-Complete with the right form of the verbs in brackets ( gerund / infinitive) . ( 2 marks)
Traditionally, front office staff are the folks in contact with the consumers or clients, while the
back office staff are the people behind-the-scenes (work) working in administrative or
support roles.Of course, in modern businesses it’s a whole lot more complicated than that, and
there is often some crossover and confusion over what constitutes a front office and back
office role.
Simply put, front office staff are the people who directly generate revenue for the company.
The front office largely consists of client-(face) facing roles. So in a finance company or
investment bank, front office departments might (consist) consist of sales and trading,
investment banking, wealth management, and private equity. The exception to the rule is
equity research, which is often considered front office, even though it doesn’t directly (bring)
bring in revenue.

2-Make words partnerships/combinations then insert them in the following sentences ( 3

marks) :
A B ANSWERS
- implement - the stability implement policies
- identify - an inflation target identify risks
-influence - threats influence exchange rates
- maintain - risks maintain the stability
- reduce -exchange rates reduce threats
-set -policies set an inflation target

a- The government set an inflation target and the bank’s monetary policy committee
tries to meet it.
b- The bank has to maintain the stability of the financial system .
c- The bank can try to reduce threats to the financial system , but it cannot eliminate
them completely.
d- All companies have to try to identify potential financial risks

3/5
 e- The bank can spend the country’s currency reserves in order to influence exchange
rates
f- The bank implement monetary policies

4- Fill in the blanks with words from the list. (2 marks)

commercial banks – ownership – mutuals – branches –
investment banking – financial – retail banks – target -
Since the credit crisis of 2007-2009 , the banking sector has undergone significant changes in
terms of target 1, regulation, and business models. Reluctantly the state has now become a
major player in both the US and European banking systems. There are in fact six categories of
banks , distinguished by their activities and branches 2 customer groups.

retail banks 3 are focused on the ordinary customer with local ownership 4 in most major town,
they offer a full range of financial 5 services for everyday life.

commercial banks 6 mostly focus on small or medium-sized companies and provide a range of
accounts for managing a company’s cash flow as well as factoring and leasing.

investment banking.7 fundamentally focuses on the world of large, often multinational,

companies, since its role is to provide services and advice on large financial transactions.

mutuals 8(for example building societies in the UK) are not public limited companies but are
owned by their members( every customer becomes a member), their core business is
providing savings , loans, and mortgages.

The powerful players in banking are the Internet banks and Supermarkets which allow their
clients to carry out many simple banking transactions in their stores.

4/ Write the following numbers in letters : (1 mark)

12.37 : twelve points three seven
365000 : three hundred sixty-five thousand
12.009 : twelve point zero zero nine
£6.25 : six pound twenty-five

III- WRITING : ( 4 marks)

Choose ONE of the following Topics:
1- What is the aim from monetary policy ? Who determines it?
2- What are sub-prime loans?

4/5
What is the aim from monetary policy ? Who determines it?
Monetary policy is one of the main instruments of economic policy. It is the responsibility of
central banks (such as the European Central Bank). Monetary policy is a set of deliberate
actions by the monetary authorities (central bank and treasury) on the money supply with a
view to regulating the economy in the short and medium term.
Monetary policy aims to adapt the money supply and the cost of credit to a set of economic
objectives. Therefore, the objective of monetary policy is not only to act on the money supply,
but also on monetary aggregates. Indeed, the objectives of monetary policy are carried out in
relation to economic and monetary objectives.
The main role of monetary policy is to ensure monetary and financial stability. This means
providing the liquidity necessary for economic growth while ensuring the stability of the
currency.

5/5