"Deutsche Bank May Ultimately Need A State Bailout" - Handelsblatt

Tyler Durden's picture

While the most recent set of troubles plaguing Deutsche Bank have been duly documented here, most recently yesterday when the stock price tumbled once again just shy of all time lows over fears the bank's multi-billion DOJ settlement could severely impact its liquidity and/or solvency, this may be the first time we have heard the "n"-word tossed around in an official German publication: as Germany's top financial newspaper, Handelsblatt said, "German financial officials reacted with shock and dismay to the leaking of a U.S. government demand for a $14 billion fine against Deutsche Bank, which may ultimately need a state bailout to pay the bill."

Some more details from the article titled "Deutsche Bank in New Existential Crisis":

Discussion of Deutsche Bank’s shaky capitalization has burst back to life, with renewed speculation on whether Chief Executive John Cryan will be forced to raise new capital, which he had previously ruled out, or make emergency asset sales.

 

Some have even raised the possibility of a government bailout of Germany’s largest bank, which would be a defining event and a symbolic blow to the image of Europe’s largest economy.

And some more troubling truth:

Many analysts fear the bank may be in a vicious circle, with losses and cancelled dividends pushing down share prices and preventing the rebuilding of a capital buffer.

 

One thing is clear. With this many unresolved legal issues, any recapitalization is likely to mean selling new shares at knock-down prices. One bright spot for the bank may be ongoing negotiations with finance company Phoenix Group for the sale of Abbey Life, its British insurance subsidiary.

 

Phoenix recently confirmed talks were at an advanced stage. Any sale would bring €1 billion into Deutsche Bank’s coffers – a welcome sum, but not enough to solve the bank’s problems.

 

So could a state bailout for Deutsche Bank be needed? With next year’s general election looming, and the populist Alternative for Germany party rising in the polls, this would be the last thing the German government wants. But there is no panic in the federal finance ministry as yet. In the past, American banks have been confronted with similarly breathtakingly initial settlement demands, only to see them radically reduced in the final deal.

 

Unfortunately, Deutsche Bank may not be so lucky. Even if theories are discounted that the $14-billion charge is payback for European tax demands on Apple, the German bank may face tough treatment in the United States.

And then there was the FDIC's vice chairman, former Kansas Fed president Thomas Hoenig, piling on some more pain for the troubled German lender:

Deutsche Bank AG’s status as the riskiest among more than two dozen large banks is worsening, according to a measure of its leverage used by Federal Deposit Insurance Corp. Vice Chairman Thomas Hoenig, adding to woes for Germany’s biggest lender as it braces for a large settlement over mortgage securities.

 

In a twice-yearly look at what’s known as the leverage ratio -- a lender’s capital measured against its assets -- Deutsche Bank drags behind the rest of the major global banks, according to data released Tuesday by Hoenig. A lower ratio means the bank has less of a cushion if a crisis arises. Deutsche Bank’s ratio of 2.68 percent as of June 30 is about half of the average for the eight biggest U.S.-based firms including JPMorgan Chase & Co. and Citigroup Inc. It also trails its ratio of 3.01 percent from last year.

 

Hoenig -- among the loudest advocates for stronger bank-capital requirements -- regularly releases a tally of capital levels at the largest banks doing business in the U.S. While it’s not an official scoring by the FDIC, his calculations put more emphasis on derivatives exposure, which Hoenig has said is the best way to figure out the riskiness of each institution. The regulator has said before that Deutsche Bank’s capital ratio is too low. “As markets have recovered and as central banks around the world continue quantitative easing programs, the incentives for increasing financial leverage have intensified,” Hoenig said in a statement.

The market seems to agree: as of this moment DB is trading within fractions of its all time low.

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nuubee's picture

Hey America, can you spare tens of Trillions of dollars?

hedgeless_horseman's picture

 

May need a bailout?

It is a fucking guarantee.

 

6.  Read The Creature from Jekyll Island: A Second Look at the Federal Reserve - 5th Edition, by G. Edward Griffin.

 
7.  Visit a coin dealer and buy some gold or silver Canadian Maple Leafs.

http://www.zerohedge.com/news/2016-01-06/hedgelesshorsemans-revolutionar...

SomethingSomethingDarkSide's picture

This War Amputee Victim may need a Blood Transfusion!

Sue Apple, will you?

How about we kick your Globally Systemically Important Bank in the nutsack and teach you who is boss and who is the bitch?

NoDebt's picture

RIght now I am sure there are DB employees cruising ZH.  They must feel so conflicted.

Troy Ounce's picture

 

 

Hey Deutsche Bank employees!  

"Fuck you!"

You're welcome.

 

philipat's picture

They are probably more likely to be crusing Headhunter websites? And if Germany bails out DB, doesn't that mean the end of the EUR because the "Club Med" countries would be delighted to follow suit? Draghi would be irrelevant? Couldn't happen to a nicer Guy?

piliage's picture

If this even comes up for discussion, Matteo Renzi goes Goodfellas on the EU

https://www.youtube.com/watch?v=3XGAmPRxV48&t=0m15s

Huh Reeeally's picture

Let's unconflict them.

Systemic TBTF banks AND ALL THEIR EMPLOYEES are parasites on the rump of humanity.

That oughta help them.

 

froze25's picture

Most of their employees don't have a clue about the financial state of the world. They are tellers working the bank window or branch managers or loan officers that are trying to make loans. Now the Higher ups that have invested in the derivatives ponzi those are the guys and gals that need to be held to account so that they can reveal why the have done this and who gave the order. As always you just need to go to the top, and that top is the Board of Directors and the CEO they command. One you identify the Board of Directors, you need to look at what other boards they sit on and map the relationships they have to other board members.

UnschooledAustrianEconomist's picture

You think there's DB folks around!?

HEY MOTHERFUCKERS, IN CASE YOU WALK BY DAVID FOLKERTS-LANDAU, PUNCH HIM STRAIGHT INTO THE FACE. IT'S ALRIGHT, IT'S IN MY NAME.

Looney's picture

 

Deutsche Bank May Ultimately Need A State Bailout

GERMANY May Ultimately Need A Bailout   ;-)

Looney

wildbad's picture

a bailout is impossible. 

nibiru's picture

After number of discussions here there are few possibilities:

1. Bail-out - a standard transfer of printed money from Schauble/Draghi (but those two hate each other) to cover the losses. 
Losers: You and me
Winners: DB shareholders, it buys time for other banks but there will be a painful replay of 2008

2. Bail-in - as in the EU directive (yes there is a pan-European EU directive on this!) bank should use deposits of its shareholders and everyone who trusted their money to bail-itself-in. Here the problem is the scale, with derivatives exposure worth 10x EU's GDP it may not be enough for DB. They can also put junk assets into divested DB 'junk' and the rest of healthy assets in DB 'Merkel4eva' and bankrupt the former. They have done it in Austrian Hypo Alde Adria http://independenttrader.org/another-bank-files-for-bankruptcy.html

Losers: Me and You and depositors a lot of them

Winners: DB shareholders and Merkel for dodging the bullet.

 

3. They will allow DB to collapse (sic!)

ok it's not going to happen so figure out for yourself which option above is better for you           

 

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

MillionDollarBonus_'s picture

We need to start thinking globally when it comes to assisting systemically important corporations. If Deutsche Bank fails, the implications will be global and every country will suffer. We need to pool together our national resources into a global fund to help struggling systemically important multinationals. This will help bullet proof the global economy and contribute to economic stability worldwide.

WHY COMMON CORE IS ESSENTIAL FOR EDUCATIONAL PROGRESS

philipat's picture

You are excelling yourself tonight MDB. Have you just been awarded another MDB or a similar contract from a Lobbying Firm?

HenryKissingerChurchill's picture

But if the whole planet is broken, the insiders might get back to the market and BUY FÜCKING EVERYTHING!

wooojoooo jubileee and shemitah!

MASTER OF UNIVERSE's picture

Let Deutsche Bank assume the role of Blanche in _Whatever Happened to Baby Jane_ and everyone else can play the character 'Baby Jane', MDB. First we will feed 'Blanche/Deutsche Bank' their pet bird under glass, and then rats from the celler for lunch. Then we can tie Deutsche Bank up and lock it in isolation before we cut all communications and watch it crawl down the stairs on it's slithering snake belly to get to the main floor phone, but we will alter the script to show Deutsche Bank in a wheelchair being pushed down the stairs like that lady in that old Richard Widmark film Noir flick where he plays a psycho.

OverTheHedge's picture

There is an option 4, which no-one seems to mention: I won't look if you don't look.

It's only bankrupt if you SAY its bankrupt. If you don't inspect the books, how would you know? Theoretically there is an issue with having sufficient day-to-day income to cover its wages etc, but that's what printing is for. Of course, this means that all prices, markets etc are irrelevant, but we have been living with that for some time....

philipat's picture

More likely the US will need a bailout?

Huh Reeeally's picture

They'll either change the rules or change the name, maybe create something like National Infrastructure Bank so it sounds like it might possibly do some good, and funnel unlimited fiat through it. Problem temporarily solved.

UnschooledAustrianEconomist's picture

That's what is going to happen. Put another level into the house of cards to gain some time.

BarbaricRelic's picture

Germany may need a 4th Crusade-Bail Out to UN-F**K the invasion they invited upon themselves.

 

SWRichmond's picture

May need a bailout?

It is a fucking guarantee.

Agree.  The sun may come up tomorrow morning.

Zarbo's picture

Why do they need a full bailout?  Why is it always "taxpayers cover everything"?

TheMeatTrapper's picture

Good thing they imported all those rapefugees. Now they can use all the taxes generated by their newly imported hard working citizens to help shoulder the burden. See, Merkel was right! 

HenryKissingerChurchill's picture

Good thing they imported all those rapefugees. See, Merkel was right!

that is the Kalergi plan, if it happens to match the end of shemitah jubileee, then that is only a tribal coincidence

stinkhammer's picture

wells fargo can help them create some net new business...bring out the stumpf

luckylongshot's picture

The problem is how to fund the bailout. The EU rules limit the options and the size of the bailout could be as much as costing every German taxpayer up to €1,000,000

Too big to save ?

EasterBunny's picture

This looks like a TTIP leverage play to me. If Merkel goes ahead and signs, the Deutsche fine will be reduced

Mass_hysteria's picture

Gangsters playing with the stock market....everything is rigged, everything is corrupt...the mafia is in control, from a friend to another friend, that's how it is...they're all linked...all buddies playing around with this concept called banking.

Mena Arkansas's picture

"Deutsche Bank May Ultimately Need A State Bailout"

Have you learned NOTHING?

Paul Morphy's picture

The citizen will be made pick up the cost, whether DB survives or whether DB fails.

 

Nothing is more certain. The citizen will be forced to pick up the tab.

BabaLooey's picture

Let this piece of shit bank go down the sewer hole.

NO bailouts - ever!

VarenneRiver's picture

State?

 

 

 

 

.....taxpayer.

 

 

 

 

...and saver. 

taketheredpill's picture

Excuse me?  A bailout is the "B" word, where the government uses citizen's money to support the bank.  The "N" word is where the state deletes the equity and takes over the bank,  Which is what the US should have done.

More like the "F" word.

 

 

King Tut's picture

Hey Hoenig-why do you look at the speck of sawdust in your brother's eye and pay no attention to the plank in your own?

GunnerySgtHartman's picture

Dooshbank may need a bailout?  Is anyone really surprised?

TBTF = TB.  Let the courts break it up! POS banks, POS companies, doesn't matter!

SumTing Wong's picture

Sure, make laws and then watch people bribe the Clintons to get around them. I say this instead...

Let them fail. Let investors and depositors lose money. It's harsh, but maybe someone will think about where they park their money next time. Maybe we'll start requiring full disclosures before we hand over cash for them to buy tons of derivatives. 

I know. I expect too much of the Kardashian watching Clinton voters. But watch their account go to zero, and maybe they will wake the fuck up and pay attention.

Dr. Darkpool's picture

Its simple. Deutsche Bank a key member of the global cartel. Thus, too big to fail.

Huh Reeeally's picture

Until it either can't survive, or must be sacrificed for the greater detriment of society.

LadiesLoveCoolJames's picture

I so sick and tired of paying for these welfare queens. This system of entitlements needs to be changed.

Colonel's picture

State "bailout" = tax on the plebes.

BuddyEffed's picture

Fuck the bailout outs. Fuck the bail ins, fuck the QE from the various CBs.  Fuck a cashless economy.   Tax the fuck out of the rich to solve this problem that the rich created with their loopholes, their offshoring, their offshore holdings, their derivatives, and their in bedded ness with politicians and lawyers where they gamed the system, and then have the gall to want to blame the downstream problems on others. 

beijing expat's picture

And thus Germany was looted by the financial oligarchy. I was thinking Italy would go first.

Mroex's picture

Having friends who live in Italy, I can tell you that these friends claim a good portion of the Italians have not lost their propensity for taking to the streets. You know general strikes, riot and mayhem. Maybe this observation is a partial answer to your question. Obviously I cannot prove it.  In addition the MSM is keeping quiet a lot of violent pushback against the refugees in the southern provinces of Puglia and Calabria. Rapefugees have been shot in the back of the head in broad daylight. Of course when the police arrive no one and I mean no one saw anything. So perhaps the oligarchs  do not feel comfortable that enough of the people will remain docile to allow full scale economic rape. Just an opinion, I too would have thought Italy was ripe and would be among the first to go.

SenselessPanic's picture

first bailout since lehman