German banks and large corporations profit from death during pandemic
For big corporations and investment bankers, the coronavirus pandemic means a massive orgy of enrichment. This applies internationally, but especially to Germany.
In the third quarter of 2021, the 40 companies listed on the Dax stock index made a total profit of 35.7 billion euros. This is 152% more than the same period last year and 21% more than in the third quarter of 2019, the last comparable period before the coronavirus crisis.
Investment bankers expect to receive the highest bonuses in six years. “Bonus booster for negotiators”, cynically title the daily finance Handelsblatt. Deutsche Bank is considering a 20 percent increase in the bonus pool for employees of its investment banking divisions, it reports, citing “people familiar with the matter.” At US banks Goldman Sachs Group and JPMorgan Chase, bonus pools for bankers in capital markets and advisory activities could increase by up to 50%.
“Banks from the United States to Europe have seen investment bank profits jump this year and transaction activity is at record levels,” Handelsblatt reports. Deutsche Bank’s pre-tax profits rose 32% in the first nine months of the year, according to the newspaper.
Deutsche Bank had already paid 2.14 billion euros in bonuses to its best employees last year. Six hundred and eighty-four (684) of the bank’s employees pocketed more than a million euros each in 2020, the highest number of earning millionaires among European banks. At Barclays, there were “only” 448 millionaires earning and only 324 at HSBC. If Deutsche Bank increases the amount of its bonuses by an additional 20%, nearly 2.5 billion euros will go into the pockets of its investment bankers this year.
For comparison, the “traffic light” coalition of Social Democrats (SPD), Greens and Liberal Democrats (FDP) budgeted 1 billion euros to pay single coronavirus premiums to nurses for specific charges they faced during the pandemic. The bonus amounts to a maximum of 3,000 euros each and will be paid out next spring at the earliest, although it is not yet clear who is entitled to it and how much each would receive. Hundreds of thousands of nurses working to their physical and mental limits to save lives won’t even get half of the few hundred professional speculators and pandemic profiteers at Deutsche Bank.
There is a direct correlation between the burden of some and the enrichment of others. Like vultures feasting on the victims of a disaster, prosecution profiteers are enriched by the consequences of the coronavirus pandemic. The German government and the European Central Bank have pumped hundreds of billions of euros in ‘coronavirus aid’ and cheap money into the economy, which, directly or indirectly, is pouring into the pockets of the super-rich .
“Around the world, investment banks reaped high profits in 2021, also thanks to the forceful intervention of many states, which borrowed billions because of the coronavirus, and also thanks to central banks, which provided to the financial markets for cheap money ”, this is how the Süddeutsche Zeitung describes this process. “The banks have mostly benefited from the fact that many more companies have issued bonds, gone public or have planned takeovers, but at the same time, also from the fact that few companies have gone bankrupt. … The fact that they also owe their good business to state aid is probably of secondary importance to many bankers.
Large industrial companies have also benefited from the government’s opening of treasury taps and a coronavirus policy that has kept factories and schools open at the cost of 7 million infections and more than 100,000 deaths. in Germany.
“Despite global semiconductor supply shortages, expensive raw materials and disrupted supply chains, Germany’s largest companies once again set third quarter sales and profit records,” the report reports. Magazine director. He lists the winners of the crisis and finds it hard to contain his joy: “Deutsche Telekom leads the profit ranking, ahead of Allianz and the automakers. BASF and Bayer are back.
Overall, he says, total sales of the Dax 40 companies increased 9% from the same period last year and 4% from the year before the crisis. “The biggest German companies are therefore generating more sales than ever before. Only three companies, VW, Airbus and Conti recorded a drop in sales in the third quarter.
As sales increased, profits exploded from € 14.2 billion in the same period last year to € 35.7 billion in the third quarter of 2021.
Workers in the following companies should take a close look at the profit bonanza and draw conclusions about their labor’s share in its creation.
First place in Magazine director Deutsche Telekom’s profit ranking goes to Deutsche Telekom with 3.5 billion euros. The insurance group Allianz follows in second position with 3.2 billion euros. The third to fifth places, despite the silicon chip crisis and falling sales, are held by car manufacturers. Volkswagen, Daimler and BMW alone generated a combined operating profit of 8.4 billion euros, 800 million euros more than the previous year.
BMW posted a 50 percent increase in profits, Daimler just under 16 percent. Despite an 18% drop in profits, Volkswagen posted the fifth highest profit of any company in Dax at 2.5 billion euros. “This means that car manufacturers’ coffers are swelling despite falling sales,” comments Magazine director .
This is also the case internationally. “The world’s 16 largest automakers generated more profit than ever in the third quarter, despite silicon chip shortages and idle factories,” said another article in the same magazine. These companies’ operating profits rose 11% year-on-year to € 23.1 billion, despite sales falling 1.6% to € 371 billion and unit sales falling 16% .
According to an EY study cited by Magazine director, the average profit margin of the world’s 16 largest automakers fell from 6.2% to 7%. With 14.6%, electric car maker Tesla achieved the highest margin, followed by BMW (10.5%), Toyota (9.9%) and Daimler (9.2%).
Tesla is also leading the way in terms of market valuation: the market capitalization of the 16 companies surveyed has increased by 41% since the start of the year to reach $ 2 trillion, including $ 1 trillion for Tesla alone. The stock market values of Ford, Mitsubishi and General Motors increased the most. In contrast, the stock market value of Suzuki and Renault fell.
The record profits of the largest automakers were also generated in part at the expense of their suppliers. According to management consulting firm PwC, only 24% of suppliers are still financially strong. About 42% of companies, in contrast, were “in a financially difficult situation”.
Auto industry profit records were broken by chemical and pharmaceutical groups BASF and Bayer, which now generate billions in profits, after losses the previous year, as well as real estate group Vonovia and the giant RWE utilities, each of which more than tripled their profits.
The orgy of enrichment in the stock market and by the banks explains why, apart from China, no government is willing to take the necessary measures that would be required, according to the scientific findings, to end the pandemic . Above all, schools and businesses must remain open at all costs to keep parents available for profit.
If this is no longer the case, not only is the rate of profit threatened to collapse, but the entire financial system collapses like a house of cards. International finance looks more and more like a Ponzi scheme, which only generates profits as long as new money continues to flow. A huge speculative bubble has created which threatens to burst if the exploitation of workers is not constantly escalated.
In the euro area, the size of the financial sector, measured by the total stock of financial assets, has doubled over the past 20 years compared to annual economic output. In 2020, Deutsche Bank granted loans of 431 billion euros worldwide, including 100 billion to commercial enterprises. This compares to risk positions arising from trading in derivatives, ie speculative transactions, which amount to 32 trillion euros.
The explosion of profits, as millions of people die and fall ill from COVID-19, reveals the bankruptcy of the capitalist profit system. No government that defends capitalism is prepared to oppose the demands of banks and corporations. The same goes for unions, which work in “social partnership” with big business and governments, organizing attacks on jobs and wages in the name of maintaining competitiveness.
The fight against the pandemic and the attacks on the rights and achievements of the working class that this implies requires a socialist strategy. The workers must organize themselves independently of the unions in grassroots committees, unite at the international level and build the Sozialistische Gleichheitspartei (Socialist Equality Party, SGP).