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Deutsche Bank Scrambles To Raise Capital: Will Sell €8 Billion In Stock At Up To 30% Discount

Tyler Durden's picture




 

Remember this?

 

This is a chart we have been presenting since last year, updated periodically, showing just how vast Deutsche Bank's potential undercapitalization is/would be if, as in the case of Lehman, for some reason gross exposure suddenly became net, and there was counterparty failure. It is also the reason why we predicted as recently as last month when Deutsche announced it would issue another €1.5 billion in Tier 1 capital, that the German megabank's capital raising is far from over.

Sure enough, just out from Bloomberg:

  • Deutsche Bank preparing a capital increase, aims to raise EU8 billion through new shares by end of June, Handelsblatt says, citing unidentified people in the finance industry.
  • Deutsche Bank likely to get new single investor
  • Negotiations ongoing, haven’t been made final
  • Deutsche Bank declined to comment: Handelsblatt

Who will buy the shares?

  • Deutsche Bank new investor may hold 5%-8% of shares

Belgium? WSJ adds:

The planned capital increase will consist of Deutsche Bank issuing a total of 360 million new shares, the person said. A single strategic investor has agreed to buy 60 million of the shares with the remainder sold to investors via a so-called rights offering, this person said. The rights offering is fully underwritten, meaning investment banks have agreed to buy any shares that investors don't purchase.

And the punchline: Bank’s new shares may be sold with 25%-30% discount.

In other words, it is liquidity scramble time, and the bank is willing to give anyone with deep enough pockets a 30% discount to market price just to get some additional short-term funding.

Why the scramble, especially if Europe is, as eurocrats, lying central bankers and conflicted pseudo-intellectuals like to claim "fixed?" We can't wait to find out although something tells us that the official version, that "the move is expected to boost a key gauge of the bank's
financial strength, its core Tier 1 level, to at least 11.5% of its
risk-adjusted assets, compared with 9.5% now" is merely the latest lie out of a continent where contrary to intentions, the ECB's annual stress test confirms banks are in worse shape than ever. Which, as Marathon CEO Bruce Richards, who during the SALT Las Vegas conference last week estimated European banks' equity shortfall to be around $800 billion, is perfectly understandable.

Source: Handelsblatt

The official press release from Deutsche Bank:

Deutsche Bank raises capital and reaffirms Strategy 2015+

Deutsche Bank (XETRA: DBKGn.DE / NYSE: DB) today announced a capital increase with proceeds expected to be approximately EUR 8 billion. The capital increase will include an ex-rights issue of EUR 1.75 billion which has already been placed with an anchor investor and a fully underwritten rights issue. The rights issue is expected to raise EUR 6.3 billon of new equity.

Additionally, Deutsche Bank today reaffirmed its commitment to Strategy 2015+ and is providing updated financial aspirations and further details of an accelerated growth strategy.

Strengthening capital

The capital measures will increase the Common Equity Tier 1 (CET1) ratio by approximately 230 basis points from 9.5% at the end of the first quarter 2014 to 11.8% on a pro forma CRD4 fully-loaded basis. This increase follows significant strengthening of this ratio, which stood below 6% in mid 2012, under Strategy 2015+. These measures will substantially increase the Bank’s capital ratio, provide a buffer for future regulatory requirements, and support targeted business growth.

Deutsche Bank placed approximately 60 million shares at a price of EUR 29.20 per share with Paramount Holdings Services Ltd., an investment vehicle owned and controlled by His Excellency Sheikh Hamad Bin Jassim Bin Jabor Al-Thani of Qatar, who intends to remain an anchor investor in Deutsche Bank.

Additionally, through the rights issue, Deutsche Bank expects to issue up to 300 million new shares. The rights offering will be led by Deutsche Bank as global coordinator and bookrunner. A syndicate of banks have agreed to a firm underwriting of the new shares.

Subject to the approval by the BaFin, a securities prospectus is expected to be published on 5 June 2014. The subscription period is expected to run through 24 June 2014.

Strategy 2015+ updated targets

The Bank reaffirmed its commitment to implementing Strategy 2015+, which has so far generated  more than 350 basis points of CET1 capital ratio increase on a pro forma CRD4 fully-loaded basis, some EUR 360 billion of CRD4 exposure reductions, and EUR 2.3 billion of cumulative cost savings from the Bank’s Operational Excellence Programme (OpEx) in less than two years.

The package of measures announced today reinforces Strategy 2015+ by enabling Deutsche Bank to address challenging operating conditions. These include tighter regulatory requirements, the increased cost of compliance and litigation, and headwinds in the macro-economic environment. These measures also enable the Bank to invest in growth opportunities in its core businesses arising from improved dynamics in the competitive environment.

As a result, the Bank is updating its targets as follows:
• Accelerated delivery of target CET1 ratio, to exceed 10% on a pro forma CRD4 fully loaded basis
• Introduction of a  leverage ratio target of approximately 3.5% by end of 2015 on a pro forma CDR4 fully-loaded basis
• Reaffirmation of the cumulative OpEx savings target of EUR 4.5 billion by end of 2015
• Updated Group post-tax return on equity (RoE) targets:
- approximately 12% in 2015 adjusted for significant non-operating items
- approximately 12% in 2016 on a reported basis
• Updated Cost Income Ratio targets:
- approximately 65% in 2015 adjusted for significant non-operating items
- approximately 65% in 2016 on a reported basis
• Deutsche Bank aspires to return surplus capital to shareholders – including in the form of competitive dividend payout ratios – in the long-term.

Core business targets for 2015 have been updated as follows:
• Corporate Banking & Securities (CB&S): adjusted post-tax RoE of 13%-15%
• Private & Business Clients (PBC): reported income before income taxes (IBIT) of EUR 2.5-3.0 billion
• Global Transaction Banking (GTB): reported IBIT of EUR 1.6-1.8 billion
• Deutsche Asset & Wealth Management (DeAWM): reported IBIT of approximately EUR 1.7 billion, unchanged from the previous target

An analyst call will take place on Monday, 19 May 2014 at 8.00 a.m. (CET). This conference call will be transmitted via internet: https://www.db.com/ir/en/content/capital_increase_2014.htm

 

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Sun, 05/18/2014 - 11:52 | 4771286 Bernanke'sDaddy
Bernanke'sDaddy's picture

Looks like crazy uncle Jim Willie was right about this one too. Best $110/6 months I ever spend. Now if he could just throw in some gratuitous Brazilian chicks in thongs in his newsletter, I'd be set.

Sun, 05/18/2014 - 11:57 | 4771305 greatbeard
greatbeard's picture

>> Best $110/6 months I ever spend.

I bet Willie feels the same way.

Sun, 05/18/2014 - 12:03 | 4771312 ArkansasAngie
ArkansasAngie's picture

If you need proof that the market is over priced ... here it is.  Also known as a haircut

 

Sun, 05/18/2014 - 12:19 | 4771354 Pinto Currency
Pinto Currency's picture

 

After selling trillions of $ of gold and silver that don't exist, they are now selling stock to raise cash; nice strategy.

Sun, 05/18/2014 - 12:44 | 4771424 SafelyGraze
SafelyGraze's picture

the article makes no sense

if a major bank like DB needs 8 billion units, a central bank simply prints the units

then lends them to DB for a thousand years at zero percent 

or buys DB stock

or deposits the units, on behalf of DB, with itself

or whatever

Sun, 05/18/2014 - 12:52 | 4771435 Ahmeexnal
Ahmeexnal's picture

Yes that is true. But then those 8billion would not come from them "muppets".    The purpose is to have euro-retirement funds buy those 8 billion that will become worthless notgeld in a few weeks time, therefore giving the socialist elite the much needed alibi for those already confiscated pension funds.  Can't have the "muppets" holding anything of REAL value, can we?

Merkel hyperinflation will make Weimar hyperinflation look like a sunny day at Coney Island.

Sun, 05/18/2014 - 13:08 | 4771460 BlindMonkey
BlindMonkey's picture

If Merkel hyperinflation is that bad I am going really long in boiled rope. The German culture is not going to let that happen without serious piñata like politicians swing away into the dark night.

Sun, 05/18/2014 - 13:25 | 4771504 linniepar
linniepar's picture

Now look how much liquidity has been injected since the crisis. Could have bailed out a thousand lehmans... and well, maybe this is all part of their diabolical plan.

Sun, 05/18/2014 - 13:36 | 4771527 flacon
flacon's picture

They are going to buy Chuck Schumer's favourite stock - "SPY". 

Sun, 05/18/2014 - 14:40 | 4771608 Headbanger
Headbanger's picture

This is plain fucking bad.

There's no getting around this horrible shit show now

This will make the Lehman meltdown look like an ice cube compared to the glacier melt deluge this one will cause soon!

 

Sun, 05/18/2014 - 17:56 | 4771922 BrosephStiglitz
BrosephStiglitz's picture

Honestly the Germans are a worrying at times and they will probably end up owning Western Europe (if not already), but I have to respect them for:

- How they have pulled together since the end of WW2 and through the Cold War up to this point.
- Their relatively level-headed approach to politics.
- Being galvanized by a set of extremely unfortunate circumstances and rather than going full retard, managing to keep themselves together. 

I mean the people here.  The politicians are largely kept at bay by a wary public with a decent memory of past events. 

Sun, 05/18/2014 - 13:29 | 4771516 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

if a major bank like DB needs 8 billion units, a central bank simply prints the units

Yes, the CB can print billions of Euros for DB. The problem with this strategy is DB would be admitting failure. This would require dismissing the executives and would also cause lots of political strife. The way they are going would avoid the premise that DB is about to fail without any hard decisions made in the short term.

Sun, 05/18/2014 - 14:11 | 4771568 SafelyGraze
SafelyGraze's picture

"The problem with this strategy is CB would be claiming victory. This would require revolving-dooring the DB executives into government after paying them larger bonuses."

fair enough

had overlooked these outcomes

Sun, 05/18/2014 - 22:28 | 4772583 newbie vampire
newbie vampire's picture

"

if a major bank like DB needs 8 billion units, a central bank simply prints the units

then lends them to DB for a thousand years at zero percent 

or buys DB stock"

I believe the reason is the German Bundesbank is NOT the same as the "esteemed" Federal Reserve Bank for the Elites in the US.

Sun, 05/18/2014 - 12:57 | 4771454 Redneck Hippy
Redneck Hippy's picture

They got a call from Buffet in his bath tub.  I didn't even know he spoke German.

Sun, 05/18/2014 - 12:39 | 4771411 vmromk
vmromk's picture

Haha, I thought you Krauts were the "master-race" ?

Sun, 05/18/2014 - 12:42 | 4771417 maskone909
maskone909's picture

Jim willy's psychotic rantings appear to be valid and correct.

Sun, 05/18/2014 - 12:50 | 4771436 maskone909
maskone909's picture

Has anyone herd why the sudden need for increased capital? Counterparty risk management? What trade or exposure went bad? When there is smoke there is fire. This has to be a result of bond and currency volitility. I would expect to see more of this soon.

Sun, 05/18/2014 - 13:27 | 4771507 seek
seek's picture

I suspect they've just simply run out of runway (eg cash). DB's problems have been pretty well known for a long time, and they likely were re-arranging deck chairs -- er, I mean using creative accounting to cover it, and they're at a point where that no longer works. I'm sure it's not a coincidence that they dropped ther seat on the metals exchanges, I wouldn't be suprised if the German auditors got more than a litte freaked out when they say the exposure with no backing, and that some of their claimed collateral was rehypothecated vapor.

As Tyler pointed out, there were stories here a year ago discussing the problems. I and many others here pointed at DB well over a year ago: http://www.zerohedge.com/news/2013-02-21/primary-dealer-cash-shortage#co...

I'm pretty sure you can find mentions of DB being fucked as far as 2-3 years back.

 

Sun, 05/18/2014 - 15:33 | 4771693 dracos_ghost
dracos_ghost's picture

Might be Basel III Liquidity requirements biting them in the ass:

"

Liquidity requirements

Basel III introduced two required liquidity ratios.[6] The "Liquidity Coverage Ratio" was supposed to require a bank to hold sufficient high-quality liquid assets to cover its total net cash outflows over 30 days; the Net Stable Funding Ratio was to require the available amount of stable funding to exceed the required amount of stable funding over a one-year period of extended stress.[7]

"

I'm pretty sure that this is around the time where they have to report.

Sun, 05/18/2014 - 14:08 | 4771563 SmilinJoeFizzion
SmilinJoeFizzion's picture

Haircut! That's a head shave

Sun, 05/18/2014 - 13:05 | 4771464 Fuh Querada
Fuh Querada's picture

@greatbeard
so you do not buy anything, in order to avoid gratifying the seller?

Sun, 05/18/2014 - 13:15 | 4771486 greatbeard
greatbeard's picture

>> to avoid gratifying the seller?

Don't read what's not written.  I've got no problem with Willie, nor people subscribing to his service.  I merely pointed out that Willie most likely appreciates the business.  Odd that you few would have a problem with such a simple comment.

Sun, 05/18/2014 - 18:11 | 4771964 Treason Season
Treason Season's picture

Pointless cheap shot, cracker.

Sun, 05/18/2014 - 12:21 | 4771353 ZH Snob
ZH Snob's picture

just how many trillions does the IMF have tucked away?  if they spend it all now on banks and bonds what will they have left for the great reset?  I guess it doesn't matter when you can simply instruct those you are saving to print more, give it to us and we will launder it into SDR's: the world is none the wiser and the party goes on!

Sun, 05/18/2014 - 12:22 | 4771364 Fuh Querada
Fuh Querada's picture

his prediction is that DB will be broken up.

Sun, 05/18/2014 - 12:25 | 4771376 Bangin7GramRocks
Bangin7GramRocks's picture

Whatchu talkin' bout Willis!?

Sun, 05/18/2014 - 12:30 | 4771392 SilverIsMoney
SilverIsMoney's picture

That's what Jim Willie is predicting... DB gets broken up into smaller banks as Germany switches over to the BRICS side of things for their own economic benefit. DB starting the entire sequence would make sense if that's what's going to happen as it gives Germany their excuse to exit the Euro and create a gold-backed currency with Russia and China.

 

It's just crazy enough to sell!

Sun, 05/18/2014 - 12:41 | 4771415 Ahmeexnal
Ahmeexnal's picture

Why on earth would Russia want a parasitic treacherous germany as an "ally", when this very same germany has betrayed Russia several times in the past and is the hand that moves the right sektor nazi puppets in the Ukraine?

No, Russia will let germany drown in the cesspool the krauts have dug up and filled.  Then the cossaks will ride and take over the land.

Rossiya uber doucheland!

Sun, 05/18/2014 - 13:02 | 4771463 Fuh Querada
Fuh Querada's picture

So many fallacies in your depiction, I don't have the time and energy to refute them.

Sun, 05/18/2014 - 12:31 | 4771395 Bernanke'sDaddy
Bernanke'sDaddy's picture

Screw you two assholes who don't like gratuitous Brazilian women in thongs.

Sun, 05/18/2014 - 17:20 | 4771459 813kml
813kml's picture

The NSA trolls must be LGBT friendly.

+1 for brown booties

Sun, 05/18/2014 - 13:09 | 4771474 Fuh Querada
Fuh Querada's picture

They wanted men probably.

Sun, 05/18/2014 - 12:43 | 4771419 OceanX
OceanX's picture

I'm still trying to find out where this guy found this little hottie to dance on the deskstop...

 

https://www.youtube.com/watch?v=hXkPR8Qik_0

Sun, 05/18/2014 - 20:53 | 4772365 MisterMousePotato
MisterMousePotato's picture

If memory serves, that is Kate Upton before she put on a few pounds that obliterated her waist.

Sun, 05/18/2014 - 12:42 | 4771420 OceanX
OceanX's picture

I'm still trying to find out where this guy found this little hottie to dance on the deskstop...

 

https://www.youtube.com/watch?v=hXkPR8Qik_0

Sun, 05/18/2014 - 12:44 | 4771423 ...out of space
...out of space's picture

here it is a  jim willie on SD about DB

http://www.youtube.com/watch?v=OvnW-daLwWc

Sun, 05/18/2014 - 15:00 | 4771638 Jumbotron
Jumbotron's picture

The offering of discounted digital zero's and ones's so Deutsch Bank might receive additional digital zero's and one's which were orignianlly created by the Central Banks of the world on computers which create new......digital zero's and one's.....out of thin air.

Who's says alchemy was fake ?

 

Sun, 05/18/2014 - 11:51 | 4771288 hairball48
hairball48's picture

Who's the new investor? The Fed? through one of it's many proxies?

 

Sun, 05/18/2014 - 12:00 | 4771308 garypaul
garypaul's picture

+1000 

Sun, 05/18/2014 - 12:16 | 4771342 Schmuck Raker
Schmuck Raker's picture

nvrmnd, too late

Sun, 05/18/2014 - 12:28 | 4771384 motorollin
motorollin's picture

Belgium, duh!

Sun, 05/18/2014 - 11:51 | 4771289 Squid Viscous
Squid Viscous's picture

Paging Uncle Warren "the vulture" Buffett...

Sun, 05/18/2014 - 14:20 | 4771391 remain calm
remain calm's picture

Come on Warren buy them. Get a ton of warrants and the key to Merkels chasity Belt. What does it matter your prastate cancer will proably kill you before they default and at 84 your Weinersnitzel needs a good warm German home

Sun, 05/18/2014 - 12:38 | 4771405 Georgia_Boy
Georgia_Boy's picture

Dunno if it's him, but it sure sounds like the new shares were created with this investor in mind.

Sun, 05/18/2014 - 11:53 | 4771292 Osmium
Osmium's picture

Buffett should take a bath and ponder his purchase of new shares.

Sun, 05/18/2014 - 12:08 | 4771321 Colonel Klink
Colonel Klink's picture

Buffett should take a bath in babies blood and ponder his purchase of new shares.

FIFY

Sun, 05/18/2014 - 12:28 | 4771383 oklaboy
oklaboy's picture

he could liquidate his position on BOA and plunk it down on DB..... and have cash left over

Sun, 05/18/2014 - 12:34 | 4771399 Colonel Klink
Colonel Klink's picture

Don't you mean Wells Fraudco?  I mean Golum Sachs?  Just how many of the TBTF/TBTJ scumbag banks is he invested in?  The man has sold his soul to Mammon.

Sun, 05/18/2014 - 11:55 | 4771296 i_call_you_my_base
i_call_you_my_base's picture

But stress tests.

Sun, 05/18/2014 - 11:56 | 4771299 InjectTheVenom
InjectTheVenom's picture

Belgium ?

Sun, 05/18/2014 - 12:11 | 4771332 zipit
Sun, 05/18/2014 - 12:16 | 4771346 BurningFuld
BurningFuld's picture

This is great news! I'm sure my life savings I have on deposit @ Dooch Bank are safe and sound now!

Sun, 05/18/2014 - 13:15 | 4771487 Keyser
Keyser's picture

As safe as German gold held by the Fed... In other words, you're fooked like the rest os us... 

 

Sun, 05/18/2014 - 15:01 | 4771640 Jumbotron
Jumbotron's picture

Belgium = The Fed = Belgium = The Fed

Isn't this the definition of money laundering ?

Sun, 05/18/2014 - 12:01 | 4771310 F0ster
F0ster's picture

Anyone checked to see if they're imposing any capital controls?

Sun, 05/18/2014 - 12:10 | 4771330 Devotional
Devotional's picture

no need to, europeans have 1 MIllions percent trust in the system. Trust me, I live in Europe. Government saves them remember?

Sun, 05/18/2014 - 13:51 | 4771547 hairball48
hairball48's picture

"Government saves them..."

Until it can't. Then what?

Sun, 05/18/2014 - 12:03 | 4771314 buzzsaw99
buzzsaw99's picture

counterparty issues are the gubbermint's problem

Sun, 05/18/2014 - 12:07 | 4771319 Kreditanstalt
Kreditanstalt's picture

You mean anyone naive enough, short-sighted enough or desperate enough to bet money on this outfit's business model...

Sun, 05/18/2014 - 12:07 | 4771320 Charlie
Charlie's picture

I'm guessing the new investor is a Gulf SWF.

Sun, 05/18/2014 - 12:09 | 4771323 Devotional
Devotional's picture

My plan - NO debt, cash and Gold in hand. I have warned family and friends in Europe. No guns though, we ain't allowed to hold them.

This will be epic, two of Portugal's banks have to raise capital too.

 

Sun, 05/18/2014 - 12:10 | 4771331 zipit
zipit's picture

Bitcoin.

Sun, 05/18/2014 - 12:55 | 4771445 smlbizman
smlbizman's picture

man...you have just put the bat signal in the sky for phonystar....

Sun, 05/18/2014 - 12:25 | 4771373 theminister
theminister's picture

Trying to figure out which banks to use here when the palace starts to burn down. We're with CGD now and have a food store started, gold/silver in hand, and two deadly weapons at the end of my arms...not sure it will be enough however when the welfare/union mob decide they want their raise at the same time our foreign creditors decide to collect. Portugal is walking dead.

Sun, 05/18/2014 - 12:28 | 4771385 Bernanke'sDaddy
Bernanke'sDaddy's picture

Just get something from the black market.

Sun, 05/18/2014 - 12:09 | 4771324 fonzannoon
fonzannoon's picture

we gotta look at what their bonds are trading at. maybe pick em up at a discount and get a decent coupon. DB is tbtf. 

Sun, 05/18/2014 - 12:12 | 4771337 i_call_you_my_base
i_call_you_my_base's picture

"DB is tbtf."

Yup.

Sun, 05/18/2014 - 12:19 | 4771357 WMM II
WMM II's picture

so, will there soon be new termonolgy?

tbts?

too big to save?

a real question.

 

 

:)

 

 

Sun, 05/18/2014 - 12:09 | 4771325 zipit
zipit's picture

Wow, things must be bad if DB is willing to send such a signal that they basically don't know what they are doing and just realized they need that money so desperately and so fast that they are basically willing to take any terms just to get their fix, for one more day.  I sense a DB Moment coming (that will make the Lehman Moment look like childs play).

Sun, 05/18/2014 - 12:18 | 4771356 BurningFuld
BurningFuld's picture

Kinda like trying to hit up a loan shark.

.3 x 8 Billion = $2.4 BILLION! Thats quite the vig. 

Sun, 05/18/2014 - 12:42 | 4771416 buzzsaw99
buzzsaw99's picture

don't worry, the pension funds will still pay the rigged rate

Sun, 05/18/2014 - 12:10 | 4771326 Racer
Racer's picture

Trying to sneak it past on a Sunday?

Sun, 05/18/2014 - 13:16 | 4771489 Kaiser Sousa
Kaiser Sousa's picture

Gold phony paper price Monday - $500

Silver phony paper price Monday - Free.

Sun, 05/18/2014 - 12:10 | 4771329 Uncle Remus
Uncle Remus's picture

8B EURO? Sofa change. That's like recycling aluminum cans to deal with your mortgage.

Sun, 05/18/2014 - 13:07 | 4771469 813kml
813kml's picture

This doesn't inspire confidence, makes one wonder why the FED just didn't print up a backdoor bailout.  Of course if the Euro crashes first there will be a flight to dollar "safety", that could keep the $ floating a little while longer.  Could also be leverage for the US to herd EU governments in the direction it wants them to go.

In this market, everything's bullish.

Sun, 05/18/2014 - 12:13 | 4771339 OFFTHEGRID11
OFFTHEGRID11's picture

What, no rehypothecation to infinity to cover?

Sun, 05/18/2014 - 12:21 | 4771361 RaceToTheBottom
RaceToTheBottom's picture

Calling Uncle Warren Buffett

Sun, 05/18/2014 - 12:30 | 4771389 oklaboy
oklaboy's picture

especially if he liquidates his position in BOA?

Sun, 05/18/2014 - 12:25 | 4771365 JPMorgan
JPMorgan's picture

54.7 Trillion derivatives exposure.

The ECB... er thanks, but no thanks, we will pass on that one.

Try Yellen, shit I mean Belgium.

Sun, 05/18/2014 - 12:23 | 4771367 JailBanksters
JailBanksters's picture

You can't have Capitalism without Capital, and you can't have Capital with out savers, and you can't have savers without people  and jobs.

EXCEPT,in the USA. You don't need captial, don't need savers, don't need people with jobs. All you need is a Central Bank that can print as much money as it wants to buy assets which it can turn into Capital.

Sun, 05/18/2014 - 12:49 | 4771433 franciscopendergrass
franciscopendergrass's picture

"EXCEPT,in the USA."

Isn't this in every single country?  How is debt over double GDP working for Japan?

Sun, 05/18/2014 - 18:52 | 4772070 JailBanksters
JailBanksters's picture

But Japan was buying into this Bond Ponzi Sceme big time.

Giving their money to the USA, and then getting thier own money back when they buy the next Bond. If countries had not bought into the US Ponzi Scheme they would of been better off. But seeking Infinite wealth just bought them exponential debt.

Sun, 05/18/2014 - 12:24 | 4771369 Bangin7GramRocks
Bangin7GramRocks's picture

8 billion. This is a joke right? Do any of you seriously think "they" will let a TBTF bank fail over 8 billion? 80 billion or 800 billion won't even cause a ripple. "They" have been manipulating everything for 5 years and you think it will all fall apart over 8 billion.

Sun, 05/18/2014 - 12:26 | 4771382 Fix-ItSilly
Fix-ItSilly's picture

Enron's implosion began with a small capital need when its derivative like off balance sheet structure began to unravel.

Sun, 05/18/2014 - 12:30 | 4771390 Bangin7GramRocks
Bangin7GramRocks's picture

Different world. There were some semblance of laws and rules then. Clinton, Rubin and Greenspan finished that off and here we are. Implosions can't happen when the fed will print to save or change/ignore rules.

Sun, 05/18/2014 - 12:32 | 4771397 The wheels on t...
The wheels on the bus are going to fall off's picture

Point taken, but ever heard of death by a thousand cuts?

Sun, 05/18/2014 - 12:36 | 4771404 Bangin7GramRocks
Bangin7GramRocks's picture

Exactly. The system must fail at some point. But it could take many years. Or it could happen tomorrow.

Sun, 05/18/2014 - 12:39 | 4771410 flash338
flash338's picture

Nah...   8B is just to cover their legal fees for fixing silver

Sun, 05/18/2014 - 12:25 | 4771371 Fix-ItSilly
Fix-ItSilly's picture

How do sanctions affect a derivative contract?  After all, an counterparty  being sanctioned by the US shouldn't be held accountable for a derivative contract that is sensitive to USD (currency, oil, etc.).  This would unbalance Deutsche's derivative book.

Sun, 05/18/2014 - 12:26 | 4771378 NoWayJose
NoWayJose's picture

With these big banks over-leveraged 10x,15x, 20x, or even higher, the 'markets' only work while everyone guesses correctly and stays on the 'up elevator'. When one big bank guesses wrong - on stocks, bonds, currencies, etc - things get ugly fast. With the Fed tapering there is a greater chance that one or more banks will jump off the bandwagon and either crush those still on the bandwagon, or get crushed as the wagon rolls on. When that happens, the game is over.

Sun, 05/18/2014 - 12:30 | 4771386 Millivanilli
Millivanilli's picture

If they had half a brain they'd bundle up bad mortgages into  risk/return tranches and sell them to unsuspecting teachers funds as can't lose investements...

Oh, wait.

Sun, 05/18/2014 - 12:29 | 4771387 scriabinop23
Sun, 05/18/2014 - 12:30 | 4771393 oklaboy
oklaboy's picture

Holy Duetchemdeutchmark Batman...

Sun, 05/18/2014 - 12:33 | 4771398 Last of the Mid...
Last of the Middle Class's picture

Just how much of that money was from Bennie Bucks? Fucking all i bet.

Sun, 05/18/2014 - 12:38 | 4771407 Ban KKiller
Ban KKiller's picture

A great(?) way to invest in a continuing criminal enterprise, I suppose. The "people" who "invest" in banks are criminals themselves. Yeah, I said it.

 So many "!" because words don't mean what they used to. Thanks, Orwell. 

Sun, 05/18/2014 - 12:40 | 4771413 Everybodys All ...
Everybodys All American's picture

None of these derivative contracts will ever be paid if things go upside down.

I just can't believe that DoddFrank didn't completely ban this derivative security business from IB's during this last downturn. /sarc

Sun, 05/18/2014 - 12:46 | 4771432 franciscopendergrass
franciscopendergrass's picture

54 trillion euro in derivatives.  What can possibly go wrong?

Sun, 05/18/2014 - 12:54 | 4771442 orangegeek
orangegeek's picture

DEEEEEEEE-Leveraging.

 

Pass the Orville Redenbacher!!

Sun, 05/18/2014 - 13:18 | 4771493 Seize Mars
Seize Mars's picture

DB will collapse. (Rather, it has been collapsing and will accelerate.)
This will be the catalyst for the next demolition phase.

Sun, 05/18/2014 - 13:48 | 4771545 Fuh Querada
Fuh Querada's picture

I stopped reading Handelsblatt on line when they started seriously censoring comments and excluding them entirely on weekends.

Sun, 05/18/2014 - 16:01 | 4771725 Perfecthedge
Perfecthedge's picture

The same with Spiegel online and many other MSM.  Comment only what they want to hear.  Applaud, everything is fine and dandy. 

Sun, 05/18/2014 - 17:10 | 4771784 WVO Biker
WVO Biker's picture

Neue Zürcher Zeitung is a shame nowadays, too. In contrast to their readers' comments.

Sun, 05/18/2014 - 14:16 | 4771574 withglee
withglee's picture

They have about $54B in equity, so this $8B raises that about 15%

They have about $1.6T in assets so this $8B raises that about 0.5%

Their $54T derivatives are leveraged to their equity by 987 times.

After this "infusion" their $54T derivatives are leveraged to their equity by 861 times.

Who is this giving more comfortable sleep?

And why is existing equity willing to offer new equity a 30% advantage over them?

 

Sun, 05/18/2014 - 14:27 | 4771585 Obamanism
Obamanism's picture

I wonder if the EU8 billion will be paid to Belgium for the Belgium buying the US Treasury bills

Sun, 05/18/2014 - 14:53 | 4771625 marginnayan
marginnayan's picture

Is this the precise reason why UST yeilds have been going down for past 1-2 weeks? Kaboom then.

Sun, 05/18/2014 - 15:09 | 4771650 farmboy
farmboy's picture

Reminds me of Citi selling a large stake to prince Camel Brain just before the big melt down

Sun, 05/18/2014 - 15:11 | 4771655 PontifexMaximus
PontifexMaximus's picture

Anybody know who are the bookrunners? Die üblichen Verdächtigen, led by GS etc.?

Sun, 05/18/2014 - 15:26 | 4771682 Oldrepublic
Oldrepublic's picture

Jim Willie on Deutsch Bank

Let’s talk about Deutsche Bank. It has been teetering on the brink of failure for years, and I’m wondering if this isn’t a setup to bring down that bank in a way that allows the mainstream media to blame the Russians.

Please know that the banking system IS going to fail. There is no way that the banks can avoid this. And, the weakest link in that system is currently Deutsche Bank, and when it goes… the rest of the Too-Big-Too-Fail banks go with it. The big question is whether THIS is the big moment.

Sun, 05/18/2014 - 16:05 | 4771728 Perfecthedge
Perfecthedge's picture

Short on DB stocks. 

Long on German made nail guns.

Sun, 05/18/2014 - 16:37 | 4771776 SmittyinLA
SmittyinLA's picture

The best are Japanese.

 

Sun, 05/18/2014 - 16:36 | 4771773 SmittyinLA
SmittyinLA's picture

"Hi, you've reached Warren's private banking number, if you need more than 5 Billion in cash, are paying more than 7% and have state backing to extract the interest payments from the public leave your name and contact info"

Sun, 05/18/2014 - 19:46 | 4772181 GoldenTool
GoldenTool's picture

Now that's funny

Sun, 05/18/2014 - 16:47 | 4771794 dojufitz
dojufitz's picture

Armstrong says the banks have been told by the Fed they are not going to be bailed out next time -

only depositers $$ ....

so they better change their models......

Sun, 05/18/2014 - 18:22 | 4771995 Racer
Racer's picture

So they expect the sheeple to put their money in the banks to be fleeced?

Oh, uh.....

Sun, 05/18/2014 - 18:05 | 4771946 jubber
jubber's picture

...and the DAX is up!  as everything seems to be?

Sun, 05/18/2014 - 18:09 | 4771954 Racer
Racer's picture

PPT busy over on the DAX and FTSE phut phut chugg chuggs I see!

Sun, 05/18/2014 - 19:37 | 4772159 Amish Hacker
Amish Hacker's picture

The LOL part of this is that the sindicate that is going to underwrite 300 million new shares is made up of banks that are themselves insolvent, at least by any real-world definition.

Sun, 05/18/2014 - 21:52 | 4772227 Sauerkraut-Opinion
Sauerkraut-Opinion's picture

Citation ZH:
"And the punchline: Bank’s new shares may be sold with 25%-30% discount. In other words, it is liquidity scramble time, and the bank is willing to give anyone with deep enough pockets a 30% discount to market price just to get some additional short-term funding."

Hmmm, the origin text in "Handelsblatt" sounds a little bit less spectacular, I translate:

"The new shares will be offered - as usually for increasment of capital in that order - with 25-30 percent discount related to the current market value."

Mon, 05/19/2014 - 04:50 | 4772875 Watson
Watson's picture

IMO, those who are looking for a catastrophe are looking in the wrong place.

If DB got itself into serious trouble, it would claim (among other things) that a DB failure could bring down the EUR.
Since Merkel supports the EUR above all else (including her own taxpayers), she would arrange for those taxpayers to backstop DB, whether or not the Bundesbank wanted to cooperate.

In fact, if you want a catastrophe, IMO you should look at the US.
In Europe, the bank rescues are disliked but not treated with the visceral hatred shown within the US.
If DB was on the point of failure, it would be politically acceptable for Merkel to appear on TV and announce a full bailout.
IMO this would _no longer_ be acceptable in the US.
If JPM was on the point of failure, my 2c are that Obama would appear on TV to confirm that Joe Public's checking account is backstopped to the FDIC limit (by the US gov even if FDIC has issues) but JPM goes into C11.

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