Deutsche Bank

2023 - 3 - 24

Post cover — Image courtesy of "Reuters"

Deutsche Bank and UBS shares hammered as banking fears keep ... (Reuters)

Banking stocks fell sharply in Europe on Friday with heavyweights Deutsche Bank and UBS Group pummelled by worries that the worst problems in the sector ...

midsized lenders and the turmoil at Credit Suisse highlighted growing risks to banks in the wake of tightening financial conditions. central bank signalled a pause in its hiking cycle. Looks like the banking crisis hasn't been entirely put to bed," said Chris Beauchamp, chief market analyst at IG. The German heavyweight said that it would redeem $1.5 billion Tier 2 notes due in 2028. probe on Credit Suisse and UBS further souring the mood. Department of Justice (DOJ) probe into whether financial professionals helped Russian oligarchs evade sanctions.

Deutsche Bank leads sell-off in European bank shares (The Guardian)

FTSE 100 also falls amid fears another bank could slip into trouble after UBS takeover of Credit Suisse.

It’s does the market have confidence in our liquidity?” “I can’t see it – yet,” they said, adding that the “worry of contagion may become contagion itself”. They helped to drag the FTSE 100 down by 1.6%. If this spikes upward it can be an indication that investors believe that the entity behind the CDS is more likely to default on its debts. Shares in the German bank fell as much as 14% before recovering some ground to end Friday down 8.6%. Europe’s Stoxx 600 banks index fell 4%, and the UK’s banking index fell more than 3%.

What's Happening With Deutsche Bank As Shares Slide 11% (Forbes)

The German institution is “on everyone's minds” as the possible next “domino to fall,” according to one analyst.

About half of the outflows came in the weeks following Silicon Valley Bank’s collapse, according to J.P. banks lost about $1.1 trillion in deposits over the last year, according to a recent J.P. The unexpected failures of mid-sized American banks Silicon Valley Bank and Signature Bank earlier this month sent shockwaves throughout the global financial system, eventually leading to the last-second rescue of Credit Suisse. banks each slid more than 1%, while shares of First Republic, the American bank most often floated as the next institution at serious risk, fell 5%. Holders of $17 billion in risky Credit Suisse bonds were not a part of the rescue deal and were left empty-handed, contributing to the rise in Deutsche Bank credit default swap rates as investors hope to avoid similarly finding themselves out of luck. for its “irresponsible lending practices” in 2006 and 2007 that partially caused the Great Recession, managed to navigate through that controversy by dramatically cutting costs, cutting roughly 20% of its global workforce in a single day in 2018 and successfully turning a profit in its last 10 quarters.

Deutsche Bank is not the next Credit Suisse, analysts say as panic ... (CNBC)

Central banks and regulators had hoped that the Credit Suisse rescue deal would help calm investor jitters about the stability of Europe's banks.

and Europe, it is just how far regulators will always go to ensure depositors are protected," the note said. [underwent a multibillion-euro restructure](https://www.cnbc.com/2019/07/05/deutsche-bank-eyes-huge-multi-billion-euro-restructuring-drive.html) in recent years aimed at reducing costs and improving profitability. Credit Suisse's collapse boiled down to a combination of three causes, according to JPMorgan. relative value)," Autonomous strategists Stuart Graham and Leona Li said in a research note. These figures would not indicate that there is any cause for concern about the bank's solvency or liquidity position. Federal Reserve](https://www.cnbc.com/federal-reserve/) on Wednesday. JPMorgan was unable to determine whether the unprecedented depositor outflows suffered by the Swiss bank had been amassed by themselves in light of SVB's failure, or had been driven by a fear of those outflows and "lack of conviction in management's assurances." These were a "string of governance failures that had eroded confidence in management's abilities," a challenging market backdrop that hampered the bank's restructuring plan, and the market's "fresh and intense focus on liquidity risk" in the wake of the SVB collapse. At the time of SVB's collapse, Credit Suisse was already in the spotlight over its liquidity position and had suffered massive outflows in the fourth quarter of 2022 that had yet to reverse. The lender [recorded annual net income of 5 billion euros ($5.4 billion) in 2022](https://www.cnbc.com/2023/02/02/deutsche-bank-smashes-profit-expectations-in-fourth-quarter-as-higher-interest-rates-bolster-revenue.html), up 159% from the previous year. [emergency rescue](https://www.cnbc.com/2023/03/20/what-ubs-rescue-of-credit-suisse-cs-means-for-markets-and-banks.html) of [Credit Suisse](https://www.cnbc.com/quotes/CSG.N-CH/) by [UBS](https://www.cnbc.com/quotes/0R3T-GB/), in the wake of the collapse of [U.S.-based Silicon Valley Bank](https://www.cnbc.com/2023/03/13/hsbc-buys-silicon-valley-bank-uk-protecting-deposits-.html), has triggered contagion concern among investors, which was deepened by further monetary policy tightening from the [U.S. [wipe out 16 billion Swiss francs ($17.4 billion) of Credit Suisse's additional tier-one (AT1) bonds,](https://www.cnbc.com/2023/03/21/credit-suisse-bondholders-prepare-lawsuit-after-at1-bond-writedown-in-ubs-deal.html) left the market unconvinced that the deal would be sufficient to contain the stresses in the sector.

Deutsche Bank, UBS stocks sink as fear of European banking crisis ... (CNN)

Europe's banking stocks tumbled Friday as investors acted on their lingering worries that the recent crises at some banks could spill over into the wider ...

The bond would have gradually lost its eligibility as a form of regulatory capital according to rules brought in after the 2008 financial crisis, the source said. Some analysts said investors had been rattled by Deutsche Bank’s announcement Friday that it would pay back one of its bonds five years before its maturity date. The cost of insuring against a possible default by Deutsche Bank on its debt has soared in recent days. [(DB)](https://money.cnn.com/quote/quote.html?symb=DB&source=story_quote_link), plunged as much as 14.5% before paring its losses to close 8.5% lower. Deutsche’s five-year credit default swaps (CDS) skyrocketed to 203 basis points Thursday, according to data from S&P Market Intelligence. The index is down 18% from its high in late February. [emergency takeover](https://edition.cnn.com/2023/03/20/investing/credit-suisse-at1-bond-write-down-explainer/index.html) brokered by the Swiss government. [hike interest rates](https://edition.cnn.com/2023/03/16/economy/european-central-bank-interest-rates/index.html) by half a percentage point, judging that inflation posed a bigger threat to the economy than recent turmoil in the banking sector. Shares in UBS [(UBS)](https://money.cnn.com/quote/quote.html?symb=UBS&source=story_quote_link) and Credit Suisse [(CS)](https://money.cnn.com/quote/quote.html?symb=CS&source=story_quote_link) were 3.6% and 5.2% down respectively. But — after two bank collapses in the United States and an emergency takeover of Credit Suisse this month — some investors may have interpreted the announcement as a sign that Deutsche Bank is nervous about the state of the banking sector and trying to overcompensate, Jonas Goltermann, deputy chief markets economist at Capital Economics, told CNN. [surprise spike in inflation](https://edition.cnn.com/2023/03/23/economy/uk-interest-rates-hike/index.html) last month. [crises at some banks ](https://edition.cnn.com/2023/03/15/economy/european-bank-rules-svb/index.html)could spill over into the wider sector.

Shares of Germany's largest lender Deutsche Bank fall amid global ... (PBS NewsHour)

Shares in Deutsche Bank, Germany's largest lender, have fallen sharply and dragged down major European banks as fears about the global financial system send ...

International negotiators agreed to those rules following the 2008 global financial crisis triggered by the failure of U.S. failures focused less-friendly attention on banks and a key Credit Suisse investor refused to put up more money. That followed a steep rise in the cost to insure bondholders against the bank defaulting on its debts, known as credit default swaps. banks and jitters about Credit Suisse’s long-running troubles led its shares to tank and customers to pull out their money. Efforts to strengthen banking regulation in recent years “puts us all in a position to say that European banking supervision and the financial system are robust and stable and that we have resilient capitalization of European banks,” Scholz said. authorities for misleading buyers of complex mortgage-backed securities that later went sour. Rising costs on insuring debt were also a prelude to Swiss lender Credit Suisse’s government-backed rescue by rival UBS. However, the selloff of European bank shares “continues to appear more related to lack of confidence than fundamentals.” Davide Oneglia at investment strategy research provider TS Lombard said it wasn’t surprising that “the next bank in the firing line is now Deutsche Bank.” It was associated with Credit Suisse in the past because of “managerial/strategic failures and involvement in many financial scandals” despite its recent profits. The selloff “might also be more emotionally driven, so to speak, rather than based on facts, but this is something that had to be expected” based on its history and performance after the global financial crisis, he said. The market values the bank at less than the assets on its balance sheet, he said: “That means investors are still very worried about what are the risks that the bank has on its balance sheet or its earnings potential going forward, and that’s not good.” “Deutsche Bank has thoroughly modernized and reorganized its business and is a very profitable bank,” Scholz said after a European Union summit in Brussels.