It's Probably Time For Deutsche Bank's Counterparties To Start Getting Nervous Again

Having collapsed this morning following a profit warning (and mass layoffs) this morning, we suspect the following chart will start to send Deutsche Bank counterparties scrambling for protection...

With a market cap of just over $21 billion now, Deutsche Bank - the once most systemically-dangerous bank in the world, and German darling - is now smaller than... $25 billion Twitter.

 

The last time Deutsche Bank was heading towards the same market cap as Twitter, Germany was contemplating a bailout and counterparty risks soared...

And hedge fund clients fled.

Comments

JungleCat Thu, 05/24/2018 - 11:06 Permalink

Buy Their Fucking Dip because it's different this time.

Aber schnell, vee must have order in ze markets!

Gauleiter Merkel, bail uns out und bail ze sheeple in.

lester1 JungleCat Thu, 05/24/2018 - 11:15 Permalink

Deutsche Bank

Bitcoin

Tesla

 

All are toxic mal investments that are propped up due to easy money from the Fed and central banks. These toxic mal investments wouldn't survive in a normal free market. A lot of people are going to get wiped out when reality hits!

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In reply to by JungleCat

itstippy Thu, 05/24/2018 - 11:39 Permalink

How does one begin to price Deutsche Bank's assets?  They're some kind of weird financial sausage made of offal from all over the Eurozone.  Most of their holdings are completely illiquid because no one knows what to make of them.  Maybe they're worth bazillions, maybe they're worth nothing, maybe they're huge liabilities.  Draghi will do whatever it takes to avoid having to find out.  He has to.

NEOSERF itstippy Thu, 05/24/2018 - 11:43 Permalink

Totally right...give it another week but if the declines continue, then Draghi and or Germany will have to step in and save this as the Fed did here.  Nice thing is we don't have to have a 40% decline in the markets before this action happens...there will be emergency meetings this weekend on this and will be fixed by next Friday.

In reply to by itstippy

Evan Wilson itstippy Thu, 05/24/2018 - 11:48 Permalink

Here is a guideline I usually go on for anything that is 'hard to price and ill liquid'.

If you can't price it, usually because there is no market for whatever it is, then it is probably not worth anywhere near what you paid for it, especially if you are all messed up like DB and if sold, would be selling it in an emergency to raise cash.

I bet with their trading book there are all kinds of losses not realized yet; that they are just rolling it all over and hoping somehow to work it out in the future.

 

In reply to by itstippy

SantaClaws Thu, 05/24/2018 - 12:31 Permalink

DB's derivatives and sub-prime-related instruments are finally bubbling over.  Bring the popcorn and settle in for a good show.

And query how many of those non-English speaking muslim immigrants are working at DB as interns?  Fire the bankers and keep the immigrants!

Batman11 Thu, 05/24/2018 - 14:17 Permalink

Investment bankers are like puppies, they need someone else to clear up the mess they leave behind.

UK investment bankers have the nanny state to clear up their mess.

US investment bankers have the FED to clear the toxic assets from their banks.

There was no one to clean up after those naughty German banker puppies.

Herdee Thu, 05/24/2018 - 14:26 Permalink

They tell you and estimate the number of trillions of derivatives that they have but in the OTC market the truth is that nobody really knows. Go through their paper work. Look at how many scores of pages talk about it. It's a gargantuan risk. Every Central Bank but especially the Fed don't even want to talk about it. In fact The Fed is probably up to their eyeballs in U.S. dollars they've lent to the E.U. who lends it to their Banks who in turn lend it out to emerging markets. All hypothecated endlessly and leveraged with derivatives.