German Politicians Are Getting Nervous About Deutsche Bank

Tyler Durden's picture

Just a few short days after Germany's premier financial publication Handelsblatt dared to utter the "n"-word, when it said that in the aftermath of last week's striking $14 billion DOJ settlement proposal, "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", German lawmakers are finally starting to get nervous.

According to Bloomberg, Deutsche Bank’s suddenly troubling finances, impacted by the bank's low profitability courtesy of the ECB's NIRP policy as well as mounting legal costs courtesy of years of legal violations, "are raising concern among German politicians." At a closed session of Social Democratic finance lawmakers on Tuesday, Deutsche Bank’s woes came up alongside a debate over Basel financial rules. Participants discussed the U.S. fine and the financial reserves at Deutsche Bank’s disposal if it had to cover the full amount.

While the participants in the meeting did not reach any conclusions on the likely outcome, the discussion signals that the risks facing Deutsche Bank have the attention of Germany’s political establishment. Which means it's almost serious enough where the politicians, in the parlance of Jean-Claude Juncker, "have to lie" or in this case redirect attention, ideally abroad: the German Finance Ministry last week called on the U.S. to ensure a “fair outcome” for Deutsche Bank, citing cases against other banks where the government settled for reduced fines.

Actually lying also works: on February 9 German Finance Minister Wolfgang Schaeuble told Bloomberg Television that he has “no concerns about Deutsche Bank." That has probably changed.

The solvency problems facing Germany’s biggest bank have been widely documented: it is already ranked among the worst-capitalized lenders in European stress tests before U.S. authorities demanded $14 billion as an RMBS settlement, more than twice the €5.5 billion the bank has set aside for litigation and almost 80% of the bank's market cap. Also, as we pointed out first in 2013, and as Matteo Renzi takes every chance to remind Germany, Deutsche Bank has a gargantuan €42 trillion in gross notional derivatives on its balance sheet. Just this week, the Italian PM told Bundesbank chief Jens Weidmann not to worry so much about Italy's massive debt load but instead to solve the problems of German banks which had "hundreds and hundreds and hundreds of billions of euros of derivatives" on their books."

But what may be most troubling is not what German politicians are talking about behind closed door, but what they are not talking about in public. Bloomberg notes that Merkel’s government is now maintaining a public silence on Deutsche Bank’s woes. Then again, what is there to say: if DB is indeed approaching the cliff, any discussion of the bank would only lead to more concerns about the bank's viability. There was some discussion of DB, however, during a September 16 meeting of Germany's Financial Stability Committee, a group of German finance officials and regulators, whose members concluded that the fine demanded by the U.S. government would probably be lowered, Handelsblatt newspaper reported. In other words, hope is once again a strategy. Sadly, when it comes to banks with multi-trillion balance sheets, this may not be the best approach.

And just to make sure that German politicians have even more to talk about, earlier today the Brussels-based Single Resolution Board, the resolution authority for 142 banks (including Deutsche Bank) warned that EU bank may need rescue funds equaling twice their ECB capital.  As Bloomberg reported today, requiring banks to have at least that same amount as the minimum capital requirement set by the ECB in loss-absorbing liabilities will ensure that they can recapitalize themselves quickly after restructuring, SRB head Elke Koenig said.

The European Banking Authority said in July that the region’s banks may need as much as 470 billion euros ($524 billion) in additional MREL-eligible funding under conditions similar to those cited by Koenig. The EBA sample consisted of 114 banks representing 70 percent of the EU’s banking assets, including lenders not overseen by the SRB.

And the bulk of these funds will have to be procured by Europe's largest bank: Deutsche Bank.

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American Psycho's picture

Bullish??? Yea, I'm going with bullish.  What could go wrong?

oops's picture

The whole world will soon experience KARMA for the Greatest Injustice of the 20th Century. http://wp.me/p4OZ4v-19

AVmaster's picture

Yeah.... 

 

They said Bear Sterns was doin great a couple of months before it broke in two as well....

 

>_>

major major major major's picture

nothing a little austerity for zee germans won't fix

Save_America1st's picture
German Politicians Are Getting Nervous About Deutsche Bank

 

naaaaahhhhh, don't even fuckin' worry about it.  All the illegal musloid invaders will surely solve all your economic and societal problems.  Just give it time to buuuuuuuuuuuuuuurn in. 

bitchez

Save_America1st's picture

snatch! 

 

Some austerity and a shit-ton of zee stoneage, homicidal, 25 IQ, blow everybody up musloids will really fix 'em all up. 

Have fun bitchez.

We have the same epidemic in America going on now.  Who needs zee musloids when we have zee kneegroids?  ;-)

At least for the most part w/ America's problem, when zee kneegroids don't like shit they mostly burn and loot their own towns. 

Somehow the globalist scumbags haven't figured out how to train them to blow themselves up in a crowded white area yet instead of mostly killing each other and destroying their own backyards.

It's a work in progress though, of course.  The globalist scum like Soros aren't going to ever stop until they are all dead.  I just can't fucking tell which sub-human stoneage species is lower on the fucking totem pole at this point.  Fuck....enough already.

The one bonus in all of this regressive mind-fucking is that the globalists have figured out a way to get these idiots to actually want to segregate theselves from white people.  Gotta give that props for that 180 degree reversal of so-called "racism", ay???? LOL

They actually beg for segregation now.  How fucking hilarious is that???? 

Fine w/ me...it's like they've taught 'em to want it more than we do.  So let it fucking happen and the rest of us will move on in peace and prosperity.

 

 

 

luckylongshot's picture

It is potentially so big a problem that austerity will not fix it. Potentially it could cost every German taxpayer as much as €500,000. Too big to bail!

Mustafa Kemal's picture

It may be too big to not fail.

Toronto Kid's picture

Greece'n Cyprus'll have the last laugh if there are German bank account haircuts.

fockewulf190's picture

It´s hard to laugh when your choking on your last piece of bread.

researchfix's picture

"...if there are German bank account haircuts."

And that´s exactly the problem. Cannot put these fine people with bank shares and big deposits to the point that financial life is a risk, and you can actually lose the money you worked, taxevaded and cheated so hard for. All special friends of Mutti.

 

bamawatson's picture

and puerto rico had electricity; until it didn't

JackT's picture

logged in just to up vote you.

Mustafa Kemal's picture

Alabama gasoline pipeline out.

Rusty Shorts's picture

Deutsche bank -

 

The collapse of 2 WTC during the September 11 attacks tore a 24-story gash into the facade of the Deutsche Bank Building. Steel and concrete were sticking out of the building for months afterward. This was eventually cleaned up, but due to extensive contamination it was decided that the 39 story ruin was to be taken down. After the 9/11 attacks, netting was placed around the remains of the building. The bank maintained that the building could not be restored to habitable condition, while its insurers sought to treat the incident as recoverable damage rather than a total loss.[3] Work on the building was deferred for over two years during which the condition of the building deteriorated.

In September 2005 human remains were found on the roof.[4] In March 2006, construction workers who were removing toxic waste from the building before dismantling found more bone fragments and remains. This prompted calls from victims' family members for another search of the building by forensic experts. In 2006, between April 7 to April 14, more than 700 human bone fragments were discovered in the ballast gravel on the roof. Workers sifted through the gravel to find more remains.

https://en.wikipedia.org/wiki/Deutsche_Bank_Building

 

walküre's picture

any more details on the origin of this?

construction workers who were removing toxic waste

from what?

Gold...Bitches's picture

Idiot.  Go to Israel and marvel at the modern world they have made in that hellhole of a geographic area.  Then turn to ANY of the neighbors of Israel and you see with your eyes what the place would be like AT BEST without Israel in control of that territory.

FatTony7915726's picture

Time to hang Frau Merkel & CEO Douche Bank!

highly debtful's picture

Maybe TPTB should sell their next bail-in as an exciting crowdfunding operation.

Much more marketable and most taxpayers wouldn't even see through it.

Al Gophilia's picture

Only $42T?

A few months ago there was a figure of $75 trillion. How did that occur without moving the market in some fashion?

cart00ner's picture

That's $US48T... But I was just thinking the same thing, did 28 trillion just

get wiped off the books? These guys are as good as US treasury/war machine losing $6t - oop's!

.

What the fucking fuck?

LadiesLoveCoolJames's picture

German gubmint bailout, derivatives disappear and all executives get a 50% bonus increase to show stability and faith in the company. Joe Kernan blows a load on camera and promptly dies of a massive heart attack with a giant smile on his face.

dark fiber's picture

Exposure is estimated between $42T and $75T.  They are not sure of the exact figure.  It is somewhere, ballpark somewhere, vaguely, there, but they don't have a clue of the total net exposure. 
Feel better?  

RadioFlyer's picture
RadioFlyer (not verified) cart00ner Sep 23, 2016 5:05 AM

Another recent ZH article showed DB changed its accounting method. They 'fixed' part of the problem.

fajensen's picture

That is Easy, those 75 T are not regularl derivatives like we know from the exchanges. They are OTC - Over-The-Counter derivatives which trades in the Unregulated markets under ISDA rules. There is no active market for these things so there are no prices to move. The OTC mrket for a particular product could literally be two persons writing a financial contract at a desk.  

Think of it as a card game between wealthy gentlemen in a smoked-filled room on a country estate. The gentlemen keep track of the winnings on scraps of paper so no money is involved.

Now, Sir Deutche has had a tremendous time and has had absolutley no clue about who the sucker was for the entire weekend, but, come Monday, those hand written paper scaps are tallied up and Wednesday a new Lord will be taking over all of his estates, his chattel, his servants, while his family ends up in the poorhouse. 

 

Scheuble being the wintner or something doesnät give a shit, cause the new lord still need his wine served and tempered.  

The Bell Rang's picture

Should be good for a gap up.........

Yen Cross's picture

   So much for those German gold deliveries.

Kirk2NCC1701's picture

If Germany had thousands if tons of AU, then DB could play hardball, and threaten to burn down the house of cards that banking is.

As it is... GS, Soros and Likudites are liking their chops.

micmac's picture

buy all the things!!!

Yen Cross's picture

 I'd like to see Douche Banks statregic balance sheet. lol

 AMZN

 TSLA

 WMT

 FB

 APPL

 JPM

 WFC

joego1's picture

The whole reason the global central banks are propping up equities. Welcome to the Zimbama stock market.

Creative_Destruct's picture

Yes. The props HAVE to stay on or BOOOOOOOOOOOOOOM!!!!

Doom Porn Star's picture

GOOG can't even run a proper fucking CDN.

YouTube can't compete with small cap services where it counts.

Once the cheap credits stop flowing, the click farms are shuttered, and the ficticious accounting is revealsed: Alphabet is gonna look like a dumped Scrabble board..

Creative_Destruct's picture

Plus a clusterbomb package of financial WMD derivitives in the trillions ready to detonate.

pitz's picture

The public won't be satisfied until Douche Bank's overpaid "bankers" are relegated to sucking dicks on streetcorners for dimes.

Mustafa Kemal's picture

That would be opposite the way it happend last time.

JailBanksters's picture

How can you have a Market Cap of 18 Billion and a debt over 1 Trillion

Must have one hell of an Accountant

Father ¢hristmas's picture

I watched that vid by the brother, Reggie Middleton, who did a forensic accounting of Deutsche and found that they were a goddamned mess lol.

Fools got judgments and liabilities against them like Todd Bridges out here.

What's the German word for "toast"?

Lolerskates 

Cryoprase the Troll's picture

>What's the German word for "toast"?

(Das) Toast.

Herdee's picture

They're worried that when this bank goes into the low single digits and 2017 rolls around,there's this little problem of Brexit and derivatives being able to clear out of London.If these morons runnibg the EU start playing hardball with England,they're going to find out pretty fast that the banks in London are a lot stronger than in Europe.That's why I think England's holding off till the start of 2017 in order to give Mark Carney the needed room to muscle up in case there's a fight.If there is,the banks in Europe are going to "Bail-In" and screw everybody in Europe.

Sandmann's picture

They are holding off on BreXit because the UK has to WRITE THE MANUAL. Noone knows how to do it but the Uk has huge experience in decolonisation and unwinding Hong Kong. Germany and France tend to collapse rather than evolve and have no transition experience.

England is the oldest continuous unified state in Europe. Even the UK can hold that title.

DB has NO banking licence in London. It passports out of Frankfurt so those trades should be repatriated to Frankfurt

directaction's picture

Twenty million new refugees should fix everything, right?