"Deutsche Bank Poses The Greatest Risk To The Global Financial System": IMF

Tyler Durden's picture

Over three years ago we wrote "At $72.8 Trillion, Presenting The Bank With The Biggest Derivative Exposure In The World" in which we introduced a bank few until then had imagined was the riskiest in the world.

As we explained then "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."


So here we are three years later, when not only did Deutsche Bank just flunk the Fed's stress test for the second year in a row, but moments ago in a far more damning analysis, none other than the IMF disclosed that Deutsche Bank poses the greatest systemic risk to the global financial system, explicitly stating that the German bank "appears to be the most important net contributor to systemic risks."

Yes, the same bank whose stock price hit a record low just two days ago.

Here is the key section in the report:

Domestically, the largest German banks and insurance companies are highly interconnected. The highest degree of interconnectedness can be found between Allianz, Munich Re, Hannover Re, Deutsche Bank, Commerzbank and Aareal bank, with Allianz being the largest contributor to systemic risks among the publicly-traded German financials. Both Deutsche Bank and Commerzbank are the source of outward spillovers to most other publicly-listed banks and insurers. Given the likelihood of distress spillovers between banks and life insurers, close monitoring and continued systemic risk analysis by authorities is warranted.


Among the G-SIBs, Deutsche Bank appears to be the most important net contributor to systemic risks, followed by HSBC and Credit Suisse. In turn, Commerzbank, while an important player in Germany, does not appear to be a contributor to systemic risks globally. In general, Commerzbank tends to be the recipient of inward spillover from U.S. and European G-SIBs. The relative importance of Deutsche Bank underscores the importance of risk management, intense supervision of G-SIBs and the close monitoring of their cross-border exposures, as well as rapidly completing capacity to implement the new resolution regime.

The IMF also said the German banking system poses a higher degree of possible outward contagion compared with the risks it poses internally. This means that in the global interconnected game of counterparty dominoes, if Deutsche Bank falls, everyone else will follow.

Notwithstanding moderate cross-border exposures on aggregate, the banking sector is a potential source of outward spillovers. Network analysis suggests a higher degree of outward spillovers from the German banking sector than inward spillovers. In particular, Germany, France, the U.K. and the U.S. have the highest degree of outward spillovers as measured by the average percentage of capital loss of other banking systems due to banking sector shock in the source country

The IMF concluded that Germany needs to urgently examine whether its bank resolution, i.e., liquidation, plans are operable, including a timely valuation of assets to be transferred, continued access to financial market infrastructures, and whether authorities can ensure control over a bank if resolution actions take a few days, if needed, by imposing a moratorium:

Operationalization of resolution plans and ensuring funding of a bank in resolution is a high priority. The authorities have identified operational challenges (e.g., the timely valuation of assets to be transferred, continued access to financial market infrastructures) and are working to surmount them. In some cases, actions to effect resolution may require a number of days to implement, and the authorities should ensure they can maintain control over the bank during this period, including by using their powers to impose a more general moratorium for a specific bank.

Here is the IMF's chart showing the key linkages of the world's riskiest bank:


And while DB is number 1, here are the other banks whose collapse would likewise lead to global contagion.

Considering two of the three most "globally systemically important", i.e., riskiest, banks just saw their stock price scrape all time lows earlier this week, we wonder just how nervous behind their calm facades are the executives at the ECB, the IMF, and the rest of the handful of people who realize just close to the edge of collapse this world's most riskiest bank (whose market cap is less than the valuation of AirBnB) finds itself right now.


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WestVillageIdiot's picture

Fuck Deutsche Bank.  I have hated those scumbags for years. I remember walking through the Financial District and passing their little paramilitary goons.  The one goon kept pushing people and telling them to move along.  I couldn't believe this was happening in the United States that I grew up in.  I just glared at the little prick and stayed where I was.  That bank proved on that day that they were pure evil.  Let all of their officers and directors commit suicide.  The world will be a better place.

P.S.  Fuck you, Juncker and Merkel.

TradingIsLifeBrah's picture
TradingIsLifeBrah (not verified) Mr Pink Jun 29, 2016 8:15 PM

US Banks will combine the powers of their buybacks like Captain Planet to save DB

Boris Alatovkrap's picture

Douche Bank is like toothless washup whore look for next fix of crack cocaine in alley while give out sexual favor and spread gonorrhea, clamidia, and syphilis to all who is walk by.

MsCreant's picture

Disgusting is that. Boris is true also.

NoDebt's picture

I'm gonna go full-contrarian on this one and say that the collapse starts where nobody is really looking for it.  A second-tier bank in similar circumstances to DB.  Oh, you think I'm not going to name names?  Wrong-o.  Stick this one in your pipe and smoke it:  Standard Chartered Bank.  (Or similar.)

Yeah, old Stan Chart.  Lurking, lurking....

If you knew where the punch was coming from it could be easily blocked.  What gets you is the punch you never see coming.

Now if you'll excuse me, I have a bottle of vodka to climb into.


chunga's picture

The big fish will blame the little fish.

Still my all-time favorite quote re: Douche Bank:

Judge Arthur M. Schack of Kings County, New York in Deutsche Bank Nat. Trust Co. v Harris (Feb. 5, 2008 - Index No. 39192/2007)

“Further, the Court requires an explanation from an officer of plaintiff DEUTSCHE BANK as to why, in the middle of our national sub-prime mortgage crisis, DEUTSCHE BANK would purchase a non-performing loan from [bankrupt and now dissolved] INDYMAC….”

Dame Ednas Possum's picture

"Deutsche Bank Poses The Greatest Risk To The Global Financial System"

Ahh... and there was me thinking it was Brexit... or was it evil hoarders of gold refusing to play the game?

Fancy that... perhaps these economists have been economical with the truth and it's the banks after all.

Surprise surprise!

Note: here's a thought... did TPTB allow Brexit as an explanation to the sheeple for a Douche Bag initiated economic collapse?

Or perhaps it's just that my tin-foil hat is on too tightly today.

wildbad's picture

...and all that coming form the pristine and above-it-all IMF.


no problemo.  we have bail-in legislation now.  how many trillion do you say?

WordSmith2013's picture

The real issue is DB's derivative exposure.




"Will The $1.5 QUADRILLION Derivatives Market Collapse In 2016?"

Antifaschistische's picture

They will blame anything they can other than the fact that debt is invented out of thin air in our current banking counterfeiting operations which directly leads to hyper levered corporations and governments and individuals.

...but the counterfeiters and counterfeiter parasites (e.g. all of Washington, Manhattan, .gov everywhere) will never mention that...because it will continue to be their source of wealth.  

Reichstag Fire Dept.'s picture

Chunga, they will buy the non-perfoming loan because they want the underlaying asset after the default. (obviously) but why?

What was the asset that was SOOOOOO important?!

Is this the new "US$800.oo military toilet seat"?

If so, you have to question everything (and everybody) behind that purchase.

Placerville's picture

Because they knew they would get bailed out at par???

Reichstag Fire Dept.'s picture

I'll be your cheerleader, NoDebt! I'm in full agreement...If Deusche Bank is being "dangled" by the IMF then it is the "distraction" from what is really going on...whatever that is!

My bet is on "BlackSwan Bank" from "Elbonia"...the rug we haven't even thought about being pulled out from under us! I'm sure the IMF has a team of consultants working around the clck on this one. If Credit Derivatives are bad than the thing that triggers their collapse is even worse.

What is that?

Squid-puppets a-go-go's picture

if this article is true, I reckon outside the sphere of derivatives AirB&B is the greatest threat to global financial stability

ft65's picture

>> If you knew where the punch was coming from it could be easily blocked.  What gets you is the punch you never see coming.

TPTB are trying to counter every punch, so yes it will be the one that slips through, most likely below the belt too.

Everyone is running scared.

beijing expat's picture

It's been awfully quiet over there lately.

Watson's picture

Standard Chartered has a long reputation for being accident-prone...


D Nyle's picture

Bankers sound different then regular people when they splatter on the sidewalk, has something to do with Nail Guns I hear

NoDebt's picture

<---- Hey, I got one of those.  How coincidental.


Boris is forget Herpies Simplex II Virus from toothless washup whore.

Miffed Microbiologist's picture

Oh what the Hell, why not the big gun HIV?



Because HIV is not funny, and Boris is funny genius 98% of the time.

Reichstag Fire Dept.'s picture

This just in:

The real identity of Boris Alatovkrap---------> Vladimir Putin.


ersatz007's picture

The US has the most banks in the top ten of that list so we win!

nibiru's picture

DB is going down Ladies and Gentlemen, tip your hats and open champagne, finally forces beyond our control screwed this bastard. 

As reported here:http://independenttrader.org/deutsche-bank-on-the-brink-of-bankruptcy.html

Wait What's picture

another "no shit Sherlock" pronouncement from the all knowing, all seeing turd that is the IMF. then again, as usual, ZH is years early to the party, which in most people's eyes is the same as being wrong. Next thing you know, the BIS is going to come out and say "systemic risk is rising" like that's news, too. they really put the idiot in the term idiot savant.


Don't have champagne, but I do have 9 FAXE Premium 500ml beers from Denmark in the fridge for CANADA Day celebrations, eh. Hopefully DB will crash and I can celebrate both events in one weekend.

ZeroPower's picture

Wow, the jealousy is strong with this one. 

Praeda2's picture

Fitting name for a dumb little cunt. Now tell them the rest of the story you dirty bitch. You're an 'occupy' scumbag. A Commie piece of shit Obama voter who was trying to break into their building and causing a riot.

I don't know what America you grew up in asshole, but someone protecting their property, is in their right to do so.

Your wishing death on unrelated people to the guy who kick your faggot ass, speaks to what the real problem is in America.

BigJim's picture

Just fucking crash already

tc06rtw's picture

 Remember,  it took  45 years  to achieve this
disaster…  It’ll take a while for it to blow.

Wilcox1's picture

Damn. Looks like an electron micrograph of HIV

The Once-ler's picture

      …  Almost impossible to tell them apart.


DB is about 5 minutes away from total implosion and if they make it through to next week I will be stupefied.

SHADEWELL's picture

I say Douche Bank, how is that $10 Billion purchase of the Bankers Trust, derivatives / custodian business looking now?, you fucking thieving fucks, tossing people out into the street as a "Trustee" where foreclosing? fuck you, what comes round goes round mf'er


Then this in 2015 http://www.marketwatch.com/story/how-bankers-trust-lost-its-value-16-yea...

Hmm  Auf Wiedersehen! 

Die you fuck, die, and rot at that 1761 St James Place adress in Santa Ana

SkunkyBeer's picture

I hope you're right, because I own a considerable number of PUTS on DB. I really would love to see it collapse, and very soon.

Tomorrow would be nice.

Amalgamated Tang's picture

3:34am, 6/30, DB 9¢ from an 11 handle.

OverTheHedge's picture

Because I have been here too long, I assume that DB won't fail. If you don't do the arithmetic, how would you know? There are some very big rugs to sweep stuff under, and no one will be looking in any event.

Mark to complete and utter fantasy, and no bailout required. If DB needs some operating money to pay salaries etc, all can be conjured out of thin air. Will counterparts accept this, and keep mum, or will someone pull the rug out, just to make a point? I vote for keeping it all teetering for a couple more months.

As I said, I've been here too long.....

TradingIsLifeBrah's picture
TradingIsLifeBrah (not verified) Jun 29, 2016 8:15 PM

Guess the IMF doesn't know what "Stress Tests" are. 

YouThePeople's picture

So solly IMF. You are the greatest threat. You pull the strings that break the strings.

Take credit where credit is due. That's what you want...right...you psychotic assholes.

Everyone knows this. Too bad your 'little' secret got out. Jump you fuckers.

It's already selling out on pay-per-view.


Correction: The IMF is a Central Douchebag Bank.

robnume's picture

Everybody, altogether now, "Deutschbank, Deutschbank, uber alles..."

runswithscissors's picture

I thought that Donald Trump posed the GREATEST Risk to the GLOBAL Financial System???? 

thinkmoretalkless's picture

Humpdy Dumpdy sat on a wall...