The Run Begins: Deutsche Bank Hedge Fund Clients Withdraw Excess Cash

Tyler Durden's picture

Deutsche Bank concerns just went to '11' as Bloomberg reports a number of funds that clear derivatives trades with Deutsche Bank AG have withdrawn some excess cash and positions held at the lender, a sign of counterparties’ mounting concerns about doing business with Europe’s largest investment bank.

While the vast majority of Deutsche Bank’s more than 200 derivatives-clearing clients have made no changes, some funds that use the bank’s prime brokerage service have moved part of their listed derivatives holdings to other firms this week, according to an internal bank document seen by Bloomberg News.

Millennium Partners, Capula Investment Management and Rokos Capital Management are among about 10 hedge funds that have cut their exposure, said a person familiar with the situation who declined to be identified talking about confidential client matters.


The hedge funds use Deutsche Bank to clear their listed derivatives transactions because they are not members of clearinghouses. Millennium, Capula and Rokos declined to comment when contacted by phone or e-mail.

Which explains why short-dated CDS is soaring.




“Our trading clients are amongst the world’s most sophisticated investors,” Michael Golden, a spokesman for Deutsche Bank, said in an e-mailed statement.


“We are confident that the vast majority of them have a full understanding of our stable financial position, the current macroeconomic environment, the litigation process in the U.S. and the progress we are making with our strategy.”

Clients review their exposure to counterparties to avoid situations like the 2008 collapse of Lehman Brothers Holdings Inc. and MF Global’s 2011 bankruptcy when hedge funds had billions of dollars of assets frozen until the resolution of lengthy legal proceedings.

As expected, Deutsche Bank stock in NY is sliding.


If the most sophisticated professionals in the world are withdrawing cash, why are German depositors leaving their life savings at risk... ahead of a long weekend in Germany (Monday is a bank holiday).

*  *  *

And for those believing that there is no contagion and this is all ring-fenced...


And US banks are sliding...


As a reminder, if the liquidity run forces DB to start unwinding or being forced to novate derivatives, it could get ugly.


Those who have cash parked at Deutsche Bank, and at last check there was about €566 billion, they may want to consider moving it for the time being to a safer bank.


* * *

Earlier this morning, we reported that Europe is experiencing a sudden and acute dollar shortage, which we attributed to Deutsche Bank. It now appears this was accurate. Since Deutsche's recent highs, the short-end of the EUR-USD basis swap curve has collapsed:

Simplifying - this chart measures the degree of USD shortage
(willingness to spend money just to get USD now) across time - the lower
the level, the more desperate for USDs.

And no, it's not a quarter-end issue:


Still not sure... Then explain why European banks just increased
their demand for USDs from The ECB's 7-day lending facility by over

As @Landonthomasjr notes, since 2009: DB shareholders put up 13.5 billion euros in equity. DB has paid 19.3 billion euro in bonuses. Perhaps they should have saved some of that cash eh?

Simply put - trust in the European Banking system is faltering, counterparty risk hedging is accelerating:

 And liquidity concerns are exploding, ahead of Germany's bank holiday on Monday.

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bamawatson's picture

sophisticated investors stack

American Psycho's picture

I was literally in front of my comp, saw DB down 5 cents, hit reload adn have been watching it fall by 60 cents in about 10 mins.  This is better than the debates.

Deathrips's picture

All currencies from central banks are promises from people scoop them up from the banks in physical form while other people will still trade their blood for them.



Long Physical! The three Bs Bullion, beans, bullets

Haus-Targaryen's picture

I have a DB account and am liquidating it tomorrow.

HedgeJunkie's picture

You may be too late by then.  Germany is about to get Greece'd.

Haus-Targaryen's picture

If they do it they do it Friday night Saturday morning

beemasters's picture

Let's hope DB'd still have time to expose other banks for gold/silver manipulation, as they promised back in April. Wait...could this be a reason for their imminent demise??? Dead bank tells no tale.

BaBaBouy's picture

Can You Spell LEHMAN In German ~~~

Here Cometh ECB QEeeeeeeee ...

oops's picture
oops (not verified) BaBaBouy Sep 29, 2016 12:19 PM

Saudi Arabia is WITHDRAWING its money following the Sept 11 Bill.

BaBaBouy's picture

""I have a DB account and am liquidating it tomorrow.""

Ve are sorry, our cash machine(s) is Broke(en), Und Ve Vill contact you ven Fix ~~~

PTR's picture

Sorry.  We needed to take some money off the books to cover derivative losses.  

Oh, by the way, did anyone tell you that all account holders with up to 2000 euros on the books were given a haircut?

kizell's picture

The fed has their excuse to not touch rates through year's end.  They'll be happy with a small correction in markets to solidify their excuse, but if markets tank too much,  they will be there to provide those necessary soothing words to move stawks up.

Mtnrunnr's picture

Plenty of reason to BTFD.

WordSmith2013's picture

Deutsche Bank is toast!


Deutsche Bank on verge of collapse and Government isn’t coming to help
WordSmith2013's picture



Insider “Deutsche Bank COLLAPSE Tomorrow – Friday 9-30-2016” – Will Wipe out banking system worldwide!
auricle's picture

Deutsche Bank on verge of collapse and Government isn’t coming to help


That shows a complete lack of understanding of what's been going on the past 7 years. What exactly is QE, ZIRP and NIRP, which are ongoing? CB's have been doing everything they can to save them. MOAR is not going to do anything. DB doesn't need help, their net zero derivatives were designed to handle this. That last bit was sarcasm.  

Vampyroteuthis infernalis's picture

This is going to blow for the simple fact that DB is cooking the books. They think there may be several weeks of cash sitting in their electronics vaults when there is only days. Let this fire get burning!

Lore's picture

Who believes those DB cap and liquidity numbers?   

"When it becomes serious, you have to lie." - Jean-Claude Juncker

Dave Thomas's picture

DB Teller: Ja, aber here is ze gut thing! You get ein free Schpidermann towlen! Ohh look Schpidey ist der web geshossen! Schone ja!?

(In the lobby you hear jackhammer sounds, and the muted screams of DB employees)

auricle's picture

The 10 handle is going to hurt. Time to really fight off those shorts.

Killdo's picture

Obama bowing to the feudal head-chopper (and then denying he did it):

debtor of last resort's picture

Kudos to ZH. The Tylers started all of this.

MillionDollarBonus_'s picture

This stock just becomes a bigger and bigger bargain! It can't be long now before the market sees this opportunity and starts panic buying, driving the price through the roof. The smart money is busy buying as the price falls, waiting for the inevitable bidding war that will develop after people realize how many undervalued assets are on DB's balance sheet, and the added advantage of being a systemically important financial institution. Either that or the ECB will give them emergency financing. It's a win for smart investors either way.

Osmium's picture

If you like them at $12, you will love them even more at $6.  

NoDebt's picture

At zero you could own the whole place for the asking.  Of course, you wouldn't want it at that point.

Like I said yesterday, BD had better start the rumor themselves that a bailout is coming (which will forcably oblige the German Govt to give them one) instead of trying to trying to deny there is a panic.

83_vf_1100_c's picture

Like the @$200 fixer-upper properties in Detroit, it would come with a lot of negative baggage.

Global Hunter's picture

thumbs up the first and last lines are the icing on the cake.

"This stock just becomes a bigger and bigger bargain!...Either that or the ECB will give them emergency financing. It's a win for smart investors either way."

eekastar's picture

Thanks MDB!

You're as steady as a rock, and an undervalued asset of the blog. No matter what doom-boom-gloom story passes @ZH, you keep your cool.


Four chan's picture

first was like who is this fucking shill then i saw mdb, ya got me ,good one.

greenskeeper carl's picture

I was wondering why gold finished own today, then I saw this article. Of course gold is down, it looks like a systemically important bank might go down, so it makes total sense that gold would get slammed.

Mtnrunnr's picture

I was thinking just the other day that we need to print about $50 trillion more USD

medium giraffe's picture

I totally agree with you MDB.  Totally.

BaBaBouy's picture

IF you have any GOLTH with DB you'd better Run ...

Never One Roach's picture

The solution is:

1) drag the bank officers out to the city square and publicly flog them in the least;

2) claw back any DB bank bonuses handed out the last 2 years; and,

3) force the other banks who have any relationship with DB to take a haircut by forcing them to ante up Billions in proportion to their relationship with DB.


Depositors, who had nothing to do with DB's risky investments, should not be held respsonible for these bankers' risky actions since they did not take part in the decision making AND did not take part in the rewards.

Lore's picture

Re: "since 2009: DB shareholders put up 13.5 billion euros in equity. DB has paid 19.3 billion euro in bonuses."

The numbers are so ridiculous and pathological that the rational mind glosses over.  Never mind "clawbacks."  This is begging for some kind of street justice. 

Lockesmith's picture


The security of your wealth is ypur own responsibility. If you trust reptiles with your cash, you deserve to lose it.

No one is coming to save you.

auricle's picture

If the most sophisticated professionals in the world are withdrawing cash, why are German depositors leaving their life savings at risk... ahead of a long weekend in Germany (Monday is a bank holiday).


A long weekend indeed!

auricle's picture

Excuse me, can I borrow that pin from you. Thanks!

f_symbols's picture
f_symbols (not verified) auricle Sep 29, 2016 5:57 PM

My last pay check was $9500 working 12 hours a week online. My sisters friend has been averaging 15k for months now and she works about 20 hours a week. I can't believe how easy it was once I tried it out. This is what I do...


Hey, fuck_symbols - got before and after asshole measurements for yourself since you went into " The Business " ?

Captain Chlamydia's picture

Well,  I ain't no rocket surgeon, but DB is about to get uncomfortable. 

eforce's picture

DB hitting sub €10 will be time to start preparing for bank collapse, it's already down to €10.30 .

nibiru's picture

I feel like there will be a lot of 'I TOLD YA!' moments when DB finally fails.


<I might get excited then>

agstacks's picture

Be perpared for the tried and true, "everyone knew they were going to fail" 

Max Cynical's picture

"Nobody could have seen this coming"