German CEOs Said To Offer "Single-Digit Billions" Capital Injection To Deutsche Bank

Tyler Durden's picture

The Deutsche Bank trial balloons are on fire today.

Moments after DB slumped on a headline that contrary to yesterday's Reuters report that the German government is holding "discreet talks" with DB, a headline hit that "there are no talks taking place with the DoJ, a German government official said"...

... a new report out of Handelsblatt announced that German companies are ready and willing to offer a "capital injection" in the low, single-digit billion euro range, according to Handelsblatt sources. More from HB:

The chief executives of several German blue-chip DAX-listed companies have discussed the state of Deutsche Bank and are even prepared to offer a capital injection if needed to rescue Germany’s largest bank from a potentially crippling penalty in the United States, according to information obtained by Handelsblatt.

Under the emergency plan, the participating companies would purchase Deutsche Bank stock to help shore up the financial institution’s modest reserves. The capital injection under discussion is in the low, single-digit billion euro range, according to Handelsblatt sources.

 

Both the leadership of Deutsche Bank and high-ranking members of the German government have been informed about the plan, sources said. Deutsche Bank declined to comment.

 

Berlin, which has refused to publicly offer financial backing to Germany’s largest financial institution, welcomed the private-sector intervention.

 

Market support for Deutsche Bank is in any case better than the use of state money,” a source familiar with the discussions told Handelsblatt.

 

Deutsche Bank faces a fine of up to €12.5-billion ($14-billion) in the United States from the sale of mortgage-backed securities in the run-up to the 2008 financial crisis, but has only set aside €5.5 billion to cover its legal risks.

 

The final U.S. settlement is widely expected to be far lower. However, if Deutsche Bank does end up paying the full €12.5 billion, its capital ratio will drop below 9 percent, which is considered too low by the markets and financial regulators.

Why this report is coming out now is unclear. As we explained one week ago, DB does not need liquidity as it can access the ECB's various facilities, as for capital - why tip the hand that DB may need it if the negotiation with the DOJ has not even officially begun.

 

In any case, DB stock rebounded modestly on the news, although since the report suggests that DB may be even closer to getting a new, and dilutive rescue package, the kneejerk reaction may be premature.

We expect many more such trial balloons in the coming days to determine just which headlines the market has the best reaction to.

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Haus-Targaryen's picture

I wonder how they classify this capital injection.  Debt or equity.  My guess is equity. 

back to basics's picture

This should be good for 200 points on the DOW until it's denied and then another 100 points for good measure

bamawatson's picture

for sure, 61 monthly payments to go
and she's all mine

eforce's picture

Until interest rates are raised, actions like this will only buy time.

I guess focus now shifts to UniCredit.

stocktivity's picture

Simple but smart...the businesses borrow the money from the German government and deposit into Douche Bank. Won't show up as a bailout from Germany. Greek and Italian bankers can't bitch.  It's all Bullshit!!!

gatorengineer's picture

Its potentially simpler than that, they the corporations issue bonds, and Molto Mario buys em at 0 interest and then they deposit into Douche. Douche in turn issues them a loan at say a 10 to 1 reserve rate, they pay their old higher yielding bonds off and they and Douche have improved its books.  In Douche terms this would be a clean deal.

JackT's picture

How do they classify "injection" -- heroin or skin? 

 

 

rosiescenario's picture

Will the shareholders in those DAX listed companies be happy to see their capital used in this fashion?

 

If I were in their shoes I'd only be happy with an extremely low valuation being placed on the equity.

RawPawg's picture

cheap bastards don't wanna invest any from their Bonus's

this low billion injection is good for what,a day or two more of life?

BurningFuld's picture

Good for what you ask? Christmas bonuses of course. Don't be a Scrooge.

ejmoosa's picture

And where will these companies borrow the money to buy these shares?  DB or the Federal Reserve?

BlindMonkey's picture

I would guess DB for the reacharound to be complete

LadiesLoveCoolJames's picture

Hat in hand bitchez! But they will feel no shame talking the handout or cashing the 8 figure bonus check.

Sofa King's picture

So they are going to loan them back the money that they borrowed from them. Awsome.

BorisTheBlade's picture

With positive interest margin, yes.

bob_bichen's picture
bob_bichen (not verified) Oct 6, 2016 1:05 PM

die handtuch der Spiderman

brada1013567's picture

I thought Hr. Buffet was going to buy DB

BurningFuld's picture

That would be great. Then everyone in Europe can get a bank account they don't know about.

DogeCoin's picture

Throwing good money after bad. Delaying the inevitable is an idiotic move.

chunga's picture

This quote from froeclosure judge Arthur Schack gets better andbetter all the time.

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….”

Quinvarius's picture

Haha.  DB needs closer to single digit trillions.  And that is not really a joke.  Only freshly printed money is saving this.  Neither customers nor corporations have the money needed to fix this.  The money they owe never existed in the first place.

Life of Illusion's picture

 

SUCK IN A LITTLE SUCKER CAPITAL AND THEN FLUSH

brada1013567's picture

Increase the financial web that is DB, sounds perfect!

 

 

TOO BIG TO FLAIL

Rainman's picture

OK ... so AIG paid counterparty DB $12B in bailout funds in 2009 for shitty MBS deals and DOJ now claws it all back with interest. US taxpayer gets it in the arse again.

Raffie's picture

So much work and talk about propping up the dead rotting horse.

Now it is getting bloated from all the gasses building up inside.

ersatz007's picture

this reminds me of something that happened about 8 years ago...hmmmmmmm.....

Sandmann's picture

Merkel sold Postbank to DB in a weird transaction that looked like a capital infusion

fajensen's picture

Doesn't make sense. The stock price has nothing to do with reserves. If they want to support DB, in the single digit billion range, the only thing that makes sense is for the "Blue Chips" to get in front of the preferred creditors so they can take over all the DB assets on the bankrupcy. The derivatives will blow up anyway, nothing can be done there.

... Of course the business people who invested in Amagerbanken back in the day got ripped off clean. That's what you get for not "getting" that control fraud is "a thing". 

MASTER OF UNIVERSE's picture

Deutsche cannot be bailed out by a single digit cash injection of a billion. So, these private sector wankers are merely blowing smoke up your butts to bide more time before DB actually is forced into declaring bankruptcy. MSM will drag this out past the election if they can. DB needs to crash right now IMHO.

 

Lets get this show on the road, and put this mofo in gear.

luri's picture
luri (not verified) Oct 6, 2016 1:20 PM

SO LET ME DECODE THIS - "THE GERMAN GOVERNMENT IS USING "PROXY" COMPANIES [BLUE CHIP ONES] TO FUNNELL IN HELP TO DB, AND CREATE AN AIR OF 'CONFIDENCE' THAT ALL IS WELL AND SUPPORTED WIHTIN GERMANY'S LARGEST BANK.

THE GERMAN GOV'T IS ALSO NEGOTIATING THE DOJ FINE AGAINST DB - AND OF COURSE DENIES THAT TOO.

SO THE QUESTION IS "WHO" IS TRYING TO TAKE OUT THE FUNDING SOURCES TO THE OLD I G FARBEN CONGLOMERATE [OF WHICH WE JUST SAW BAYER TAKE OVER MONSANTO]. WHAT IS THE REAL STRUGGLE HAPPENING BEHIND THE SCENES?

 

TradingTroll's picture

Why are you shouting? Cant reason with a shouter

MFL5591's picture

More free money.  Why only 1 Billion and not 100Billion?   Cannot pay it back either way.

Sandmann's picture

Look where Achleitner is an AR member. His contacts at Daimler, Allianz, Bayer will pump in money to ensure their credit lines are maintained. Bayer buys Monsanto. The Bonds these corporates isue are then sold to the ECB and thereby the ECB bails out DB. No doubt the utilities and the Deutsche Post/DHL will issue a few bonds.

DB can then securitise the loans to these corporates and sell then through SIVs  to ECB. It could be a lovely daisy chain of asset/liability back-to-backs

Silverymoon's picture

Billions from (((whom)))

brada1013567's picture

Merkel pays the corporations, the corporations bail out DB, thus Merkel is saved politically.

Jack's Raging Bile Duct's picture

Yes. "German companies" are definitely doing the buying. Certainly not getting money on the sly with garuntees from ECB. Unthinkable. DB is a good investment!

Yes We Can. But Lets Not.'s picture

Scene: DB executive suite conference room, some time in Jahr 2017

Zo, Herr DB CEO, vee provided zee kapital injection last year.  Ja, you are velcome.

Now, mein Freund, vee vould like zee terms of our korporate line of zee kredit modified, ja?

headfake's picture

another manipulative headline

numapepi's picture

You suppose "single digit billions" of injected liquidity is sufficient? When the DOJ fine in and of itself is fourteen billion?

Plus, of course, the pms the banks are selling to drive down the price, so they can but them back at a lower price, putting a nice profit in their pocket... and getting real money, liquidity, while their at it.

After all, isn't that what all the big fines have been for... manipulating markets, especially through collusion, to defraud their customers? LIBOR come to mind...

Moreover, since there are never consequences for the criminals, just for their victims, so... why not? The shareholders will pay the fine next year when they are caught again. ...and the beat goes on...

rosiescenario's picture

,,,,also DB is the first party named is a silver price fixing action now in front of the courts in the U.S. Treble damages are quite possible in that case. The price fixing covered a seven year period, so the damages could be very large X 3.....

roisaber's picture

That should be good for a week.

numapepi's picture

Governments and TBTF banks collude to steal directly and indirectly from customers and shareholders...

http://incapp.org/blog/?p=2955

DC Beastie Boy's picture

They need something in the order that starts with a T, not a B.

Paging the owners of the Fed who received $23Trilion in 0.5% loans a few years ago. 

Can you help here?

Atomizer's picture

Why doesn't Deutsche Bank take out a loan on itself using the same LTV modeling standards? 

Hehehehehehe

Huh Reeeally's picture

So a few CEO's commit to borrow at 0%, the lenders get their cut, then they sell the debt to the ECB, and DB gets bailed out until the next catastrophe. Now the CEO's defacto own a bank. Convenient.

surf@jm's picture

"Es geht der Diaetenerhoehung"......shout the employees of those companies.......

"there goes the pay raise".......