A Crashing Deutsche Bank Scrambles To Assure Markets That It Is "Fine"

Tyler Durden's picture

With Deutsche Bank stock plunging to fresh all time lows in early trading after Merkel reportedly ruled out state aid the embattled German lender, the bank found itself in the unenviable position of once again having to defend its balance sheet to avoid further stock price declines, especially as doubts mounted if the German government response was due to a pre-emptive request for aid.  DB quickly tried to squash such speculation when a bank spokesman said that  "CEO John Cryan at no point asked the German Chancellor for the government to intervene in the U.S. Justice Department's mortgages case."

He added that Deutsche Bank will solve its problems without relying on help from Berlin, Germany's flagship lender said on Monday.

The market remains unconvinced: shares in Germany's biggest bank hit a record low of 10.62 euros on Monday...

... with its default risk once again spiking.

Naturally, DB had no option but to project confidence: "Deutsche Bank is determined to resolve its challenges on its own," the spokesman said. "There is currently no question of a capital increase. We are meeting all regulatory requirements," the spokesman added. Cryan and Merkel met in July to discuss Brexit repercussions but did not touch on the matter of potential help with U.S. legal proceedings, a person close to the matter said according to Reuters.

That said, the sellside suspects that a new capital raise appears inevitable. Analysts at Mediobanca said that a rights issue looked inevitable.  "John Cryan always said that a rights issue would only be triggered by a larger-than expected litigation charge and it appears increasingly likely that Deutsche Bank investors will be asked to post bail for Deutsche's past crimes," they said in note on Monday.

Meanwhile, the defense continued after Jorg Eigendorf, head of communications at Deutsche Bank told CNBC, that Deutsche bank liquidity position is very comfortable, adding that the credit portfolio is very strong, while the "liquidity position very comfortable, third quarter almost over and I can tell you that we are fine and very comfortable here.”

Touching on the stock price, Eigendorf said that the “share price is low but that is not what is worrying us and that is not what we are looking at. What is really important to us is our credit story which is very strong, it is fundamentally strong.”

If only the market agreed.

But perhaps the most sober - and realistic - assessment came from Andreas Utermann, Allianz Global Investors’ chief investment officer, who said on BBG TV that Germany would ultimately help out a struggling Deutsche Bank: "I don’t buy at all what’s coming out of Germany in terms of Germany not wanting to step in ultimately if Deutsche Bank was really in trouble."

"Deutsche Bank is “too important for the German economy.” The bank’s tussle with the U.S. Department of Justice over a potential $14 billion legal settlement is “a political issue which will get resolved at a lower price,” he said in an interview with Francine Lacqua and Tom Keene on Monday.

The only question is just how will Germany, which has been so staunchly against an Italian bailout of its own insolvent banks, will i) pass such a deal with popular sentiment strongly against more bank bailouts and ii) what will a bailout look like: with €162 billion in debt and only €17 billion in equity, the government check would be substantial. And that, of course, excludes the €42 trillion in gross notional exposure which few if any have been willing to discuss in recent weeks.

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Looney's picture

 

I won’t believe into Deutsche Bank’s collapse until Cramer starts screaming “Buy! Buy! Buy!”   ;-)

Looney

Byte Me's picture

but but but but but .... this is all unpossible-er...sureley?

MillionDollarBonus_'s picture

For goodness' sake, Deutsche Bank is a systemically important financial institution! This means that its bankruptcy would send shockwaves through the global economy, and threaten the global recovery! When did it become fashionable to let vital companies go bankrupt??? We need to bail out this bank immediately! In fact, every country in the world should be contributing to a bailout fund, because this affects everyone!

Millennials – Who Are They And What Do They Want?

beemasters's picture

" We need to bail out this bank immediately!"

How much have you got?

kliguy38's picture

god save the banks..........

Volaille de Bresse's picture

"god save the banks..."

 

Talking about "god" I'm sure the Greek gods are laughing their ass off about what's going on in Germany right now.

How do you say "hubris" in German?

 

kliguy38's picture

god save the banks..........

bamawatson's picture

your mouse is laden with derivatives

Shemp 4 Victory's picture

Dr. Lisa Bardack has declared that Deutsche Bank is in excellent financial health.

OverTheHedge's picture

Me? I'm thinking: Buy the dip!

Price is looking good, and my BFF MDB has a point - it will never be allowed to fold.

However - full disclosure: I wouldn't touch Deutsch Bank with YOUR barge-pole, let alone mine. But you should BTFD, really.

Best investment opportunity since Lehman's....

Edit: I've been trying to find at what point Lehman's announced something along the lines of:  "What is really important to us is our credit story which is very strong, it is fundamentally strong." Perhaps we can put a timeline together to work out when it all starts to end, and the wheels come off. 

Is there anyone thinking of buying Deutsch bank? (titter, giggle, guffaw, snort, etc)

Huh Reeeally's picture

Bang on MDB! After the whole world contributes to bailout DB then maybe they can send me a few bucks too?

JRobby's picture

Got counter party risk?

You know they do

Byte Me's picture

For my money..

DB are ISSUING CDS and buying their own CDS shit.

You just KNOW it makes sense. Ain't shadow banking wonderful?

Byte Me's picture

Uh, nearly forgot..

I guess that makes Frankfart a shoe-in for a Global Financial Centre then; the centre where TBTF goes - to die..

Beam Me Up Scotty's picture

It won't be Germany bailing out DB, it will be the fucking lender of last resort----aka THE FED!!

X_in_Sweden's picture
X_in_Sweden (not verified) Beam Me Up Scotty Sep 26, 2016 7:37 AM

I don't think so.

The FED wants to steal the remaining 1300 tonnes of German Gold.

Typical NYC Bankster-Gangster MO.

Meyer Amschel Bauer, originally from Germany, known today as Rothschilds, continue their 250 years of looting die Deutsche Volk.

_____________________________________________________

In January 2013, the German central bank (Deutsche Bundesbank) announced plans to repatriate 300 tonnes of its 1,500 tons of gold from the US and 374 tonnes from France by 2020, in order to have half (1,695.3 tonnes) of its official gold reserves stored in Frankfurt.[6][7][8][9][10][11][12] The gold in the U.S. was earned by West Germany through trade surpluses in the 1950s and 1960s and was never moved out of the United States due to fear of invasion by the Soviet Union.[13][14][15] In 2013, a mere 5 tonnes were shipped due to logistical difficulties; However, in 2014, the Bundesbank shipped 85 tons of gold from New York (and 35 tonnes from Paris) to Frankfurt.[16][17][18][19][20][21] In 2015 Germany shipped 110.5 t from Paris and 99.5 t from New York. [22]_____________________________________________________

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

https://duckduckgo.com/?q=repatriation+german+gold&t=ffab&ia=news

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

newmacroman's picture

Yup, exactly what I was thinking.

The $14 billion fine would go a long ways to filling the gold obligation.

And everyone thought it was for the bite on Apple...

Bush Baby's picture

Hallo Herr Obama?

It sure vould be a shame if DB vent under and took U.S. stocks with it right before the election.
It vould be nice if you give us 3-4 trillion Euros, und ve vould like that in cash of course.

 

Danke

Frau Merkel

Fiji's picture

I wrote a few days ago that Merkel is too stupid and arrogant to understand the DB Black Hole and react properly... today I think she is mad, there is no possibility that a capital increase can save 50sth trillion of derivative shit 

After Merkel's words Italian banks should go down but looks like that italian funds are defending banks stocks... in the long term npl can only increase with austerity and european financial rules. Monte Paschi bank is up 7% who is buying today?????

JRobby's picture

I love the sound of derivative black holes in the morning

Sounds like utter defeat

Disc Jockey's picture

And smells like team spirit!

Paul Kersey's picture

Yeah, what could possibly go wrong?

Deutsche Bank has a notional value, of the derivatives on its books, of €52 trillion. Like Lehman, DB is 40X levered. This is some serious shit. Germany's biggest bank is about to go bust, and the contagion could spread far and wide.

BorisTheBlade's picture

Better yet, wait for Gartman to go long Deutsche. Don't wait for Cramer, he is still recovering from his convincing buy for Bear Stearns.

ersatz007's picture

Well put, well said. 

Reichstag Fire Dept.'s picture

"Deutsche Bank's stock is safe." ~ Jim Cramer

phatfawzi's picture

please someone get Jim Crammer on the phone and ask him if we should pull money out of DB.

 

https://youtu.be/V9EbPxTm5_s

GunnerySgtHartman's picture

Push the handle and FLUSH DOOSHBANK

skbull44's picture

One must lie when things get serious...and in other news, the fox replied to distress within the chicken union that their concern over him guarding the henhouse was significantly overblown.

101 years and counting's picture

Germany wont bail out DB.  but super mario will craft another greek bailout to pour another 2 Trillion EUR into the german derivative ponzi....i mean bank.

BorisTheBlade's picture

Germany won't bailout straight away, but they might nationalize it under condition of wiping out existing equity holders (not that I believe there's any value in equity left).

MaxThrust's picture

looks like the "Final Act" is commencing. From now on the future is uncharted.

CRM114's picture

“too important for the German economy.” 

 

aka TBTF.

nmewn's picture

"Nothings wrong with DB! Don't sell DB!!!" - Jim Krammer

Bay of Pigs's picture

Set for all time lows at the NY open. Que the "deer in headlights" picture Tyler.

12.10 -0.65 (-5.10%)

south40_dreams's picture

"It's just a flesh wound"

RawPawg's picture

if anybody cares...

i'm good...and prepared

what's the hold-up?

NoPension's picture

Letting things unwind just before the US presidential erection? Things must really be bad, it they can't duct tape this fucker together for another 45 days.

BandGap's picture

Wasn't the plan, then. How to stay in power.......especially when it might slip away with a Hildebeast loss.....hmmm, what to do.

King Tut's picture
King Tut (not verified) Sep 26, 2016 7:05 AM

DB gets below $10 all hell will break loose

Huh Reeeally's picture

Maybe, but Italian BMPS shares are worth a whopping 0.19 euro, and they're fine (?), so DB has a ways to go yet.

saldulilem's picture

Gradually, then suddenly

RawPawg's picture

if anybody cares...

i'm good...and prepared

what's the hold-up?

Batman11's picture

Who is Deutsche bank's collapse going to blow up?

Probably the US whose banks who are on the other side of the derivatives trades.

It will blow Germany up if it tries to bail it out.

TBTS - too big to save

Fiji's picture

Exactly, do you remember Japan lost decade tale?

JRobby's picture

2 decades. Many that were alive in '95 aren't around any more and the populous has slipped into a moribund lethargy that barely have the will to procreat anymore.

See the insidiousness of the central planners for who and what they are.

Cock your weapons