Case study:

Troubles for Deutsche Bank, Wells Fargo Drag Down Wall Street

Reported by Keris Alison Lahiff: Sept 29, 2016 4:03 PM EDT

• A string of bad news for Deutsche Bank (DB) and Wells Fargo (WFC) hit its peak on Thursday, dragging Wall Street deep into the red.
• The S&P 500 was down 0.93%, the Dow Jones Industrial Average fell 1.07%, and the Nasdaq fell 0.93%. Stocks had halved losses by the end of the session.
• Deutsche Bank shares plummeted on reports around 10 hedge funds have limited their exposure to the bank. Reports from CNBC have yet to be confirmed. Deutsche has been under the hammer since receiving a $14 billion fine for mortgage-backed securities from the U.S. Justice Department earlier this month. Deutsche Bank fell to an all-time low after closing with losses of 6%.
• Wells Fargo CEO John Stumpf was under Capitol Hill scrutiny again on Thursday, arguing that there had been no "orchestrated effort" of customer fraud. The bank has been under pressure to explain and correct a recent scandal wherein its retail-banking division created up t 2 million unauthorized customer accounts to meet sales targets. The bank has since agreed to a $185 million settlement with government officials over a sales fraud investigation.
• Stumpf also said the bank would discontinue all sales goals by the end of the week. Stumpf told the House Financial Services Committee the bank no longer needed those targets to grow.
• Wells Fargo could be in for even more trouble on reports the Justice Department is preparing to sanction the bank over repossessing cars owned by military members. The bank could be hit with a fine as large as $20 million for alleged violations of the Service members Civil Relief Act.

• Source: Lahiff, K.A. (2016). Troubles for Deutche Bank, Wells Fargo Drag Down Wall Street. Retrieved October 18, 2016, from: https://www.thestreet.com/story/13836645/1/troubles-for-deutsche-bank-wells-fargo-drag-down-wall-street.html

Based on the case study above answer the 2 questions:

Question 1:

• What are the FIVE (5) key risks identified from the case above? Provide your answers with supporting examples for the "Troubles for Deutsche Bank, Wells Fargo Drag Down Wall Street" case.

Question 2:

• As the chief risk consultant, how would you advise the treasurer of a bank in preventing/reducing the downside impact of such unforeseeable risks from the case above?