At $72.8 Trillion, Presenting The Bank With The Biggest Derivative Exposure In The World (Hint: Not JPMorgan)

Tyler Durden's picture

Moments ago the market jeered the announcement of DB's 10% equity dilution, promptly followed by cheering its early earnings announcement which was a "beat" on the topline, despite some weakness in sales and trading and an increase in bad debt provisions (which at €354MM on total loans of €399.9 BN net of a tiny €4.863 BN in loan loss allowance will have to go higher. Much higher). Ironically both events are complete noise in the grand scheme of things. Because something far more interesting can be found on page 87 of the company's 2012 financial report.

The thing in question is the company's self-reported total gross notional derivative exposure.

And while the vast majority of readers may be left with the impression that JPMorgan's mindboggling $69.5 trillion in gross notional derivative exposure as of Q4 2012 may be the largest in the world, they would be surprised to learn that that is not the case. In fact, the bank with the single largest derivative exposure is not located in the US at all, but in the heart of Europe, and its name, as some may have guessed by now, is Deutsche Bank.

The amount in question? €55,605,039,000,000. Which, converted into USD at the current EURUSD exchange rate amounts to $72,842,601,090,000....  Or roughly $2 trillion more than JPMorgan's.

The good news for Deutsche Bank's accountants and shareholders, and for Germany's spinmasters, is that through the magic of netting, this number collapses into €776.7 billion in positive market value exposure (assets), and €756.4 billion in negative market value exposure (liabilities), both of which are the single largest asset and liability line item in the firm's €2 trillion balance sheet mind you, and subsequently collapses even further into a "tidy little package" number of just €20.3. 

Of course, this works in theory, however in practice the theory falls apart the second there is discontinuity in the collateral chain as we have shown repeatedly in thh past, and not only does the €20.3 billion number promptly cease to represent anything real, but the netted derivative exposure even promptlier become the gross number, somewhere north of $70 trillion.

Which, of course, is the primary reason why Germany, theatrically kicking and screaming for the past four years, has done everything in its power, even "yielding" to the ECB, to make sure there is no domino-like collapse of European banks, which would most certainly precipitate just the kind of collateral chain breakage and net-to-gross conversion that is what causes Anshu Jain, and every other bank CEO, to wake up drenched in sweat every night.

Finally, just to keep it all in perspective, below is a chart showing Germany's GDP compared to Deutsche Bank's total derivative exposure. If nothing else, it should make clear, once and for all, just who is truly calling the Mutually Assured Destruction shots in Europe.

But don't worry, this €56 trillion in exposure, should everything go really, really bad is backed by the more than equitable €575.2 billion in deposits, or just 100 times less. Of course, a slighly more aggresive than normal bail-in may be required in case DB itself has to followin the footsteps of Cyprus...

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
FieldingMellish's picture



(btw, your graphs say billions instead of trillions but I understand its all play money anyhow)

Ahmeexnal's picture

DB is one of those 99 red ballons running out of helium and flying right over a cactus patch.....

JackT's picture You just don't convert to USD and this didn't happen.

Abraxas's picture

What's a few trillion among the friends.

Ahmeexnal's picture

As I expounded a few days ago, the douche sheeple are mesmerized with the UEFA champions league and are completely oblivious to news like this.
Expect a real SHTF after the UEFA cup finals late may in Wembley.

Abraxas's picture

A 10000 episode Spanish soap opera is scheduled to start at the end of UEFA cup, so the waking up of the sheeple will be postponed for another 146 years.

Stackers's picture

Bilateral netting FTW !!!

You pick me up, then I'll pick you up. As long as neither of us lets go, we should hover 150' off the ground just fine.

pods's picture


<smokes fat doobie>

Oh yeah, that will work!  Pass the doritos.


TheFourthStooge-ing's picture

It's cartoon gravity rules. This is what allows Bugs Bunny to jump out of a freefalling elevator when it's a foot off the ground and escape injury.

SafelyGraze's picture

fortunately, the bar on the left represents the *notional* GDP, which is significantly larger than the *actual* GDP


francis_sawyer's picture

Keep strokin' the bishop... A big surprise awaits at the end...

Manthong's picture

Take heart .. just two of our provincial too big to prosecute wise guys.. BOA and JPM..  together,  exceed our Teutonic good bud's phony books.

Bananamerican's picture

Bankers....industrious little termites ain't they?

Colonel Klink's picture

Bankers....insidious little termites ain't they?


Fixed it for you.

BigJim's picture what causes Anshu Jain, and every other bank CEO, to wake up drenched in sweat every night.

Silly Tyler! They wake up drenched in sweat from all the hookers and blow. 

LOL. Like THEY could care less about derivatives, nett (or gross). Their homeys at the CB's have got their backs, to infinity AND beyond. 

nmewn's picture

They have the best accountants money can bribe.

CheapBastard's picture

I hate's so....transparent.

Cacete de Ouro's picture

$20.30 ...Just one yuppie foodstamp and 30 cents change.
Not bad in the collapsible world of notional derivative vortexes.

Even David Copperfield couldn't beat that illusion

Cacete de Ouro's picture

Sorry, I thought you said $20.30...

Hold on, you did, well $20.3....

But point still stands...

Divided States of America's picture

Now you know why Banks OWN the Government and not the other way around.

knukles's picture

He didn't get that rich himself.

...maniacal laughter... you are oh so right about that one, dude, and you don't even know it...  and I don't mean you as in response, I mean you as the guy who'd originally said it and has no clue whatthefuck is going on...

Freddie's picture

It realy sucks that JP Morgan-Chase-Rockefeller-Rothschild or Citi did not beat D Bank.   America needs to be #1 again.



Wakanda's picture

As I type, the boyz and girlz downtown are tweaking spreadsheets to retake the crown.

Yes We Can!

disabledvet's picture

Without proper oversight or an ethical framework...

max2205's picture

Thank God they can raise $2,8 Billion to cover this.....oh wait....

Stoploss's picture

Well, now we know why the share offering.

Im guessing more than a few loans went bad..

Harbanger's picture

The money for the majority of shares will indirectly come from the FED.  Like I said, they have to keep monetizing the puppets in Euroland or they're finished.  German banks need bailouts just as much as the cyprus banks.  All the worlds keynesian welfare states are failing together.  That includes the US.

caribbeanbarry's picture

'80's pop reference.  Awesome...

Freddie's picture

LOL!  I kinda of laughed and thought - oh a bullshit one hit wonder song translated from German to English that became a hit.  Well old Nena or who ever wrote the song may have nailed it.

Talks about war, destruction, jet fighters (or could be drones with O-muslim).  It talks about devastation - must be the Greece and Cyprus parts.

Maybe it is about a European war when the banks, euro and hopefully the EUSSR blow up.

Europe needs more lamp posts, rope and people with balls to put criminals in those nooses.  America sure as hell does not ahve people with those guts. 

"99 Red Balloons"   You and I, and a little toy shop
Buy a bag of balloons with the money (euros - fiat - bitcoins) we've got
Set them free at the break of dawn
'Til one by one, they were gone

Back at base, bugs in the software
Flash the message, "Some thing's out there"
Floating in the summer sky
Ninety-nine red balloons go by

Ninety-nine red balloons
Floating in the summer sky
Panic lads, it's a red alert
There's something here from somewhere else

The war machine springs to life
Opens up one eager eye
Focusing it on the sky
Ninety-nine red balloons go by

Ninety-nine Decision Street
Ninety-nine ministers meet
To worry, worry, super-scurry
Call the troops out in a hurry

This is what we've waiting for
This is it boys, this is war
The President is on the line
As ninety-nine red balloons go by

Ninety-nine knights of the air
Riding super high-tech jet fighters
Everyone's a super hero
Everyone's a Captain Kirk

With orders to identify, to clarify and classify (rehypothicate)
Scrambling in the summer sky
As ninety-nine red balloons go by
Ninety-nine red balloons go by

Ninety-nine dreams I have had
Every one a red balloon
Now it's all over and I'm standin' pretty
In this dust that was a city

If I could find a souvenir
Just to prove the world was here
And here is a red balloon
I think of you and let it go


disabledvet's picture

"if looks could kill they proably will." it's easy to look at something and say "that guy did that" but in fact it could be just an algorithm "and nobody's the wiser." tough to do with poetry definition "it doesn't make sense." thanks fer sharin'....

noless's picture

99 Düsenjäger
Jeder war ein großer Krieger
Hielten sich für Captain Kirk
Das gab ein großes Feuerwerk
Die Nachbarn haben nichts gerafft
Und fühlten sich gleich angemacht
Dabei schoss man am Horizont
Auf 99 Luftballons

99 Kriegsminister -
Streichholz und Benzinkanister -
Hielten sich für schlaue Leute
Witterten schon fette Beute
Riefen Krieg und wollten Macht
Mann, wer hätte das gedacht
Dass es einmal soweit kommt
Wegen 99 Luftballons


rough translation(my german is shitty and google translate is a bitch with lyrics apparently)


the captain kirk part you got but, but the second part is: the neighbors have reaped nothing, so feel yourself made equal all because of 99 little balloons.


next verse:


99 ministers of war, with matches and gas canisters, hail to the clever people(sarcastic), whove caught wind of a fat catch, they called for war and wanted power, man who would have thought, all because of 99 little ballons.


wish i had the one i worked out before, sounded way better, and was a more direct translation.


they had to clean it up for americans.

Freddie's picture

99 ministers of war, with matches and gas canisters, hail to the clever people(sarcastic), whove caught wind of a fat catch, they called for war and wanted power,

For a pop song this was suprisingly good.  This was circa 1980. Boy Europe has really been F over since 1980.

Just change it to 99 EU(SSR) ministers with the banksters who want to F over all Europeans. . Hail to the banksters with their fiat and derivatives.


steelhead23's picture

Seens like just a couple years ago Reggie Middleton was drawing a bullseye on DB, but only a few paid him any attention as zombie banks may be dead on paper, but the people of Cyprus and others have been enslaved to ensure those derivatives remain money good.  Heck, DB is up 4.6% on the day as I write this.  Go figure.

Longtermnotreally's picture

Deutsche Bank über alles, especially when it comes to collapse potential


I think its an accounting "error", "mistake", "misplacement".. Its actually probaby MUCH bigger then that..

Spigot's picture

How did you get to 'we', grasshopper?

SilverIsKing's picture

The trillions graph is still at the printer.  There's a backlog due to another customer print order.  Customer name is Bernanke.

trollin4sukrz's picture

A trillion here and a trillion there.. before you know it-it adds up to some real money..

PiratePawpaw's picture

What could go wrong?.........

disabledvet's picture

The word "everything"'comes to mind. Of course "if it's just a game" the wrong hands it could...