"Investors Have Completely Lost Faith In Deutsche Bank" A Top 10 Shareholder Admits

Tyler Durden's picture

After a day of "rock solid" Lehman-isms, emergency bond buyback plans, and a stock price still unable to close green, Deutsche Bank is on the ropes (despite CNBC proclaiming that "it doesn't feel like a Lehman moment.") However, as dawn breaks across the motherland, something more insidious is breaking for Germany's largest bank. Deutsche faces an uphill task rescuing its stock from record lows, especially, as Reuters reports, a top 10 shareholder exclaims "investors have completely lost faith in the bank," and a fast recovery from this crisis was unlikely.


Given the way the credit market is trading, perhaps 'the major shareholder' has a point...


As Reuters details, Germany's flagship lender has trailed its rivals in bouncing back from the 2008 financial crisis, hamstrung by having to pay out billions of dollars in fines to end a string of legal disputes and ageing technical infrastructure.

It is the last of the major European banks to embark on a painful restructuring of its bloated investment bank, in the face of tougher regulation that reduced profitability, and the cost of that overhaul contributed to it posting its biggest annual loss on record last month.


Shareholders are worried about the ability of management to execute a two-year turnaround plan, announced last October, against the backdrop of a deteriorating global economic outlook and negative interest rates.


"Investors have completely lost their faith in the bank," a top 10 shareholder told Reuters, adding that a fast recovery in the share price was unlikely given the magnitude of the problems weighing on the company.


Several investors told Reuters they feared Deutsche would need to tap markets for more capital - despite raising a total of nearly 20 billion euros (16 billion pounds) from investors in 2010 and 2014 - to deal with regulatory and legal issues.


"We believe that Deutsche Bank has a capital shortfall of up to 7 billion euros, depending on the outcome of a range of litigation issues, which could necessitate a highly dilutive capital increase," Citi analysts wrote in a note last week.

Sseveral investors said they felt time was running out for the bank to show successes - such as returning to profit or stabilizing its share price - after other large lenders had moved on and closed the chapter of financial crisis.

"There's no benefit of the doubt," another top 10 investor said, adding currently investors were voting with their feet. "Two years (as planned by Cryan for the revamp) is a long time. There's no margin for error."


Questions are also being raised about the quality of the bank's supervisory board.


"We miss competence in financials on the supervisory board," said the first top 10 shareholder, adding that support for Chairman Paul Achleitner was also waning and a new face was needed for a fresh start for the bank.


"However, at this stage, there's no obvious candidate to succeed him, so he will likely be kept in charge until the end of his mandate in May 2017," the shareholder said.

Of course there is always the "government put" but in this case - with Europe's new bail-in "reforms" DB co-CEO Cryan's hopes that "the government would intervene," could well leave everyone from equity to depositors taking and haircut (to zero in the former case).

*  *  *

So finally, as emergency bond buyback plans are thrown out in desperation.. because that will not be enough to solve this problem, as a Deutsche banker readily admits...


  1. Recognize the problem. It is not oil, it is not in the banks..it is a run on central bank liquidity, especially dollar based and there needs to be much more ($) liquidity. Keynes said to deal with overinvestment boom you cut you don't raise rates. QE is impractical but getting the dollar down would greatly lift dollar based liquidity. So for a starter Fed shd stop raising rates and clearly signal an extended time out.
  2. Draghi shd follow up with a one 2 punch, not to get rates down but open the refi spigot to banks and ease liquidity concerns.
  3. China needs to come clean. Devalue, stabilize reserves and then allocate 1 tn+ to short up strategically important institutions. Stop intervening in equity markets.
  4. And Basel 3 (?4) should be delayed specifically regarding leverage ratios and threat of higher. As a token move there shd be deemphasis of the SSM/bail in rules until there is clarity from the ECB on liquidity sources for stressed banks.
  5. how about some fiscal stimulus
  6. on negative rates -- instead of making them punitive on the banks allow the banks to earn the spread, make them punitive to savers.. Cash shd be charged interest -- put the micro chip in large denom notes/tax cash withdrawals.. encourage spending not saving .. mortgage rates can be negative and banks can still earn a spread. The spread is the problem not the rate.

The existential fear in Deutsche Bank's analyst is tangible, as is the implied threat: "don't do these things, and if Deutsche Bank and its $60 trillion in derivatives blow up, it will be on you."

And so, we leave you with the question we asked just last year - "Is Deutsche Bank The Next Lehman?"

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deKevelioc's picture
"Investors Have Completely Lost Faith In Deutsche Bank" A Top 10 Shareholder Admits"

Now that the stock has tanked 60%, the guy wakes up.  

FlipFlop's picture

Mother of all fucking dominos.


God help us when that pile of complex derivatives is pulled! Good news is that German finmin tells, it is sound. 20bn is a rounding error is budget.

Panic Mode's picture

To describe Douche Bank as a starting domino doesn't do justice. 

It's more like a big giant wrecking ball dangling on top of this big dominos setup.

maskone909's picture

"Im in love with the CoCo"

offwirenews's picture

I wish I had access to these fancy CDS instruments because this call was a no-brainer.

FlipFlop's picture

Experience shows that it is still not too late to go short. I was playing heavily in 2008-09 with bank CDS. Boy, I loved the storm !!

azusgm's picture

IIRC, one of the Maiden Lanes was set up to deal with CDSs and synthetics. I do not expect for that to be the case again.

SpanishGoop's picture

"We believe that Deutsche Bank has a capital shortfall of up to 7 billion euros,"

Is that all, really ?


FlipFlop's picture

Distraction before the rape season?

williambanzai7's picture

Fuck Deutsche Bank, the bailout Frau

J Jason Djfmam's picture

Douche Bank collapsing?

Fuck You! Pay me!

Panic Mode's picture

And all the PIGS junk bonds they hold. Look at the bright side, Nekkei only down 2.3%

hendrik1730's picture

Deutsche Bank is rock bottom stable. That's what they said at Dexia, Fortis, AIG, Lehmann, Bear Stearns, Barrings Bank, .... one can fill out the list. Banks are BUST, all of them, they are inundated in their own virtual shit. Banks do NOT produce ANYTHING but wasted paper and big bonuses for the top-brass and all this needs to be paid for by their highly esteemed clients ( aka. the muppets ). Small problem : by now, even the dumbest muppet starts to recognise this. Negative rates? Easy like hell.  Just get your cash out of the banks, after 3-5% deposit reclaims, ALL banks fall. ALL banks are leveraged to the hilt because of the fractional reserve mechanism. ALL banks fall, and lo and behold : fiat currency is just fried air when real people start to abandon the faith in those nice pieces of paper that in reality can only be used to light a wood fire.

SoilMyselfRotten's picture

Yep, all we need now is Cramer to come out ala Bear Stearns and proclaim all is well

J Jason Djfmam's picture

Douche Bank is just as solid as those other banks you list.

And Vice Versa.

fonx's picture

If DB crashes what are the options? Europe will enter a severe recession. From my point of view I see 2:

A) Deflationary cycle, that will extend to the rest of the world. Well, not bad, at least prices won't go higher. ECB will have to print, but no new money will be created as this newly printed money is filling the gap left by the hole DB created.
B) Screw the EUR (on purpose to have a reset) -> print money like mad to create hyperinflation. After a point the EUR will be replaced by another new currency or Europe will adopt another currency, maybe the USD? So we have a reset, but many normal people with savings will lose everything. Only physical assets will remain valuable.

What do you think, folks?

Arnold's picture

Raise the rate Granma.

Do it for the savers.

The speculators have had their time in the sun.

azusgm's picture

We'll have a new global digital currency and we'll all be slaves. Your entire life will be monitored (as if it isn't already).

Four chan's picture

The Lehman moment, didn't seem like a Lehman moment, until it was a Lehman moment.

Sandmann's picture

No it looked like a Bear moment primarily

Sandmann's picture

It wasn't a Lehmann Moment until JPM seized collateral

Ghordius's picture

+1 Sandmann. Though I'd say it wasn't a "Moment" in earnest until Hank Paulson talked about tanks in the streets


azusgm's picture

The Madoff moment happened the same way and so did the MF Global moment. The Morgue knew what was going on in all three cases because they held the line of credit on all three entities (and pretty much run the NY Fed). JPM participated as the lender that kept the party going then pulled the plug and made a clean getaway in one piece in all three cases.

Does anyone see a problem here?

Jungle Jim's picture

Die, banks, die!

Iam Yue2's picture

Keep an eye on Commerzbank.

Sandmann's picture

Good idea, Martin Blessing has refused a new contract as CEO and goes in October. His wife Dorothee is Goldman and former colleague of Achleitner, Aufsichtsratsvors. of DB. When he was at Allianz and needed to offload Dresdner Bank having trashed it, he sold it to Commerzbank which then needed a Government bailout

theorist's picture

DB deserves to crash. It seems to have spent years "Buying" market share in investment banking activities to the point that one would suspect that, if valued properly, their derivative portfolios would show up as highly negative. OK, rant over. If they do go down and there is a Lehman moment, it will be way worse than Lehman as these guys are a counterparty in a much larger number of trades and sizes than Lehman. A loss of confidence in DB is already probably causing counterparties to try to shift trades away from them, or to demand more stringent collateral conditions, which in itself will help to push these guys over the edge.

With regard to a drop in USD liquidity due to a rise in US interest rates, you wouldn't know it; the EUR is up against the dollar - it makes no sense.

Also, Negative Interest Rates! Suggesting that savers be penalised at the expense of borrowers to stave of deflation is the stupidest idea I have ever heard. Has anyone thought that a loss of interest for savers, the majority of whom are retired may be causing a slowdown in sspending as they no longer ahve that significant component of income coming in? Lowering rates, so people will borrow will allow those who have already borrowed to re-finance their debt and allow them to limp along, but will only be marginal in increasing spending - these guys are already tapped out! And anyway it is likely to be outweighed by the savers no longer spending due to the loss of interest income mentioned above.

fonx's picture

DB deserves to crash, we agree on that. But EU citicens don't deserver to be dragged to hell by DB. I'm trying to figure out what would happen if DB collapses (see my comment few posts above yours).

What do you think it can happen? I think that if the hole is too big (DB is much bigger than LB) it won't be possible to save the EURO. This means that people like me with savings are screwed. Many years of work gone down the pipeline. Unless we find a safe vehicle were to put the money.

I'm thinking about a property as an edge. If we enter deflation my property will go down and I'll lose part of the money. But If the EUR is dead it would be a very smart move.

Stocks is a no go, other currencies might be safer but not for sure, gold is not money anymore so is volatile. Govt bonds not 100% safe...

2500saturdays's picture

gold is and has been money for 5000 years of human history. We have lost our way for 2 generations but may find the path home.

fonx's picture

But now gold is not money, it's a commodity so it has lost part of its safe asset halo. It has become more volatile so you run the risk of jumping in gold when it's going down.

NDXTrader's picture

"A loss of confidence in DB is already probably causing counterparties to try to shift trades away from them, or to demand more stringent collateral conditions, which in itself will help to push these guys over the edge."

That started happening weeks ago. That's why you are getting BIG players liquidating stocks to raise cash

Amalgamated Tang's picture

How worried should I be? DB stock is up tonight. The DAX is up tonight. the STOXX is up tonight. And DOW futures are up. 

I hate to worry alone.

Iam_Silverman's picture

"I hate to worry alone."

Don't worry at all!  I'm sure that they will be coming on the air shortly to calm you with words such as "it is contained".

rickowens's picture


Deutsche Bank AG NA O.N. (DBKGn) Real-time CFD 14.550 +1.320 +9.98%


well someone still believes????? please halp

Dude-dude's picture

 "put the micro chip in large denom notes/tax cash withdrawals.." 

So, 'The Micro Chip' is finally ready for global deployment - mwahahaha.


Escapeclaws's picture

Why, if Eurpe is such a mess is the Euro once again shooting upward? There has been virtually no coverage of this. DB's problems would suggest the euro should fall against the dollar.

NDXTrader's picture

In the 1st inning of this game counterparties in Europe are selling assets (US stocks) and converting the resulting dollars into Euros to shore up their own balance sheets against potential DB failure. Think of it as the tide pulling back before the tsunami. The 2nd inning sees a crazy dollar rip higher for safety

Ghordius's picture

interesting explanation, but aren't the counterparties to Douche Bank more in dollar then in euro trades, loans, etc.?

DB is a global megabank... that happens to be based in Germany for historical reasons

just saying, the explanation is good, but imo does not cover the whole of the matter


Sandmann's picture

DB trading is based in London, DB Bankers Trust is based in NYC

Ghordius's picture

what kind of... coverage would you like? one that confirms what you believe or one that you might find a tad hard to swallow?

anyway, unleash the Draghi Jawbone!


Wild Theories's picture

ya know, it's one thing to know it's not Ghordius, but when there's two of you /kevin /stuart in the same thread wearing Ghordius' skin, it gets kinda weird

Iam_Silverman's picture

"but when there's two of you /kevin /stuart in the same thread wearing Ghordius' skin, it gets kinda weird"

We are legion........

Signed, Sybil.

Sandmann's picture

because the Fed is going to prop up Deutsche yet again !  As the man said "It's deja vu all over again

Debugas's picture

Q: what needs to be done ? answers 1-6 bla bla bla

A: how about plan B as in bankruptcy ? Very neat and practical solution

Debugas's picture

as for taxing cash it is already implemented in the baltics

for example in Lithuania one can only withdraw €500 per month per bank without charge. Anything above that limit is charged

Coldfire's picture

Rock solid? You mean like Northern Rock? You'd think a British banker like John Cryan would know better than to turn such a fate-tempting phrase. History rhyming? We can only hope...

Sandmann's picture

rock solid describes the intellectual capacity of those who have run DB

Professional Side-Eyer's picture

I'm a firm believer in PMs and have been stacking since I started my own business a few months ago. I've got a few kilos of silver and an ounce of gold so far. But with the speed at which things have started to unravel I don't know if I have enough time to amass a sizeable stack before Au and Ag become unaffordable.

Do you think it would be a good idea to take out a loan and buy as much PM as possible right now? Interest rates are around 13% - 17% where I live. And as much as I don't like getting into debt, I don't want to miss out on a once-in-a-lifetime opportunity.

Any advice, gents?