The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
Deutsche Bank inserted two bold new financial targets into its annual report in 2000. Thanks to “the enhancement of our organisational structure”, the German bank committed itself to “planned annual growth in earnings per share of at least 15 percent” for the subsequent three years, and an average annual return on equity of “more than 15 percent”.
The little question for asset managers is why they earn so much. Buyside pay could soon overtake that of the investment bankers, the traditional “masters of the universe.” But the bigger question is what the industry should do with the $150 trillion it manages.
Negative interest rates show finance has gone postmodern. The system has become self-referential and value-free, in a way that might please cultural theorists. That’s supposed to help the real economy run more smoothly. But it’s risky, high-handed and not fair to savers.