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Old 09-19-2016, 09:42 AM   #1
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Deutsche Bank is a big domino

Big enough to spark systemic risk in the global banking system, so it's not going to be allowed to fail, but it continues to make headlines for all the wrong reasons...

Quote :
Deutsche Bank AG extended losses as analysts signaled that legal costs may force the German lender to raise capital even if it whittles down the U.S. demand for $14 billion over its mortgage-backed securities business.

The shares fell as much as 2.6 percent in Frankfurt trading Monday and were 0.4 percent lower at 2:03 p.m., pushing the loss for this year to 47 percent.

Germany’s biggest bank would be “significantly undercapitalized” even if the bank had sufficient provisions to cover an eventual settlement with the Justice Department, Andrew Lim, a Societe Generale analyst, said in a note to investors Monday.

Any settlement above 5.4 billion euros ($6 billion) would imply a capital increase is needed just to pay the fine, he wrote. That’s about the amount the bank had in reserve for all legal disputes at the end of the first half.

Among other cases, Deutsche Bank still has to deal with a probe of its equities business in Russia and is struggling to sell its German retail lender Deutsche Postbank AG.
...
http://www.bloomberg.com/news/articl...om-settlements
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Old 09-19-2016, 10:52 AM   #2
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Watching all these various systems and .gov orgs and too big to fail companies working at trying to either make some headway or keep it all from falling apart sometimes starts to feel like some global sized isometric exercise that while certainly expending a lot of effort, doesn't seem to accomplish much.
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Old 09-21-2016, 08:49 AM   #3
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Nice recap/summary of the DB dilemma with some speculation on what's coming:
Quote :
...
Deutsche is Germany’s only G-SIB (Global Systemically Important Bank). Deutsche is Germany’s financial flag carrier. It stands at the centre of Germany’s long held desire to have Frankfurt eclipse London as Europe’s financial centre. Although Germany also has Allianz as a G-SII (Global systemically Important Insurer), without Deutsche Bank Germany ceases to be a globally significant financial nation (G-SFN – OK I made that one up). Without Deutsche Germany would not sit at the top table of global finance. France would. France has three G-SIBs. The balance between France and Germany within Europe would shift. Maintaining that balance between France and Germany, at the heart of Europe, has been critical in European affairs since WWI.

Could Germany ever allow Deutsche Bank to go under?
...
... The important point is that in any sale of the viable parts of Germany’s only G-SIB, the brutal fact of the matter is that there is no other German financial institution that could afford to buy any of it. Commerzbank? Allianz? Letting an insurer buy a bank? So imagine the situation for Germany. They lose their seat at the top table and then they watch as France, England, American or perhaps China buy the crown of German financial might.

So I don’t think it will ever happen. Or at least it will only happen when Germany is truly out of any other options.

So if Deutsche is not going to be declared “no longer viable” what are the alternatives?
...
More: http://www.golemxiv.co.uk/2016/09/note-deutsche-bank/
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Old 09-27-2016, 08:31 AM   #4
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Filed in the "no shit, Sherlock!" category:
Quote :
The German government will have to bail out Deutsche Bank AG if its financial situation gets bad enough, Allianz Global Investors AG Chief Investment Officer Andreas Utermann said.

“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 ,” Utermann said Monday in a Bloomberg Television interview with Francine Lacqua and Tom Keene. “It’s too important for the German economy.”

German officials have tried to shut down talk of a potential rescue for the country’s biggest bank, with Chancellor Angela Merkel’s spokesman Steffen Seibert saying Monday there are “no grounds” for speculation over state funding for the $2 trillion-asset lender. Focus magazine reported Sunday that Merkel has ruled out any state assistance for Deutsche Bank AG as she considers whether to run for a fourth term next year.
...
http://www.bloomberg.com/news/articl...y-allianz-says
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Old 10-03-2016, 09:00 AM   #5
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Skimming through the PMBug News page and just about everyone is talking about DB right now. There is a lot of speculation about catastrophic failure, but much like with Lehman, I expect govco to intervene if it becomes necessary.

Rickards put out a long piece on the subject recently with an interesting twist:
Quote :
... we use a method called causal inference to make forecasts about events arising in complex systems such as capital markets. ...

This is the same method we used to correctly forecast the outcome of the Brexit vote. Now we’re using it to forecast the likelihood of a Deutsche Bank stock collapse in the next few months.

The strongest signal is not coming from Germany — it’s coming from Italy. While the world is waiting for the denouement of the Deutsche Bank drama, another bank fiasco is playing out in Italy. This involves the Banca Monte dei Paschi di Siena (BMP), the world’s oldest bank still in operation, founded in 1472.

BMP was the only top bank to fail the ECB’s recent stress tests. It is required to raise capital and has announced plans to do so. The capital raise is being led by JP Morgan and a syndicate including Goldman Sachs and some of the largest banks in China.

The syndicate was formed in July and was supposed to announce results by the end of September. We’re almost there and the news is not good. Reuters recently reported that the capital raising effort is not going well, and the syndicate expects they will delay any announcement until after important Italian elections scheduled for November.

What do the travails of BMP have to do with Deutsche Bank? Both banks are too-big-to-fail and are failing, but BMP is closer to the brink. It’s the “canary in the coal mine” for Deutsche Bank.

Italy wants to bail-out BMP with taxpayer money. That’s the standard playbook that governments used in 2008. But the rules have changed.

At the G20 Leaders’ Summit in Brisbane in 2014, it was decided that bailouts would be replaced by “bail-ins.” In a bail-in taxpayer money is not used to recapitalize the sick bank. Instead bondholders and depositors take haircuts and are involuntarily converted into equity holders.

Imagine if you had $500,000 on deposit at the bank and you got a notice in the mail that said your deposit was now $250,000 (the insured amount) and the other $250,000 had been converted into stock in a “bad bank,” which might or might not produce returns in the future. That’s what happens in a bail-in.

The German government under Angela Merkel is telling Italy that they cannot bail-out BMP; they have to use the new bail-in rules instead. But what’s sauce for the goose is sauce for the gander. If Germany forces Italy to bail-in BMP, then Italy will insist that Germany also bail-in Deutsche Bank when the time comes.

Germany won’t like that, but if they don’t bail-in Deutsche Bank, the European Union will come apart because of acrimony between Italy and Germany. Compared to this dispute, UK Brexit is a sideshow. Greece is a sideshow of a sideshow. Italy is the real deal. If Germany and Italy can’t cooperate, then there is no European Union.

This is why the BMP capital raise syndicate pushed their announcement out past November. They know that if they announced their failure today, the bail-in option would be required immediately and the government would lose the elections. If the government can get past the elections intact, the bail-in of BMP (or bail-out as the case may be) can come in December.

Markets won’t wait while German and Italian politicians tiptoe around the bail-in question. They will draw their own conclusions and start a run on Deutsche Bank. It’s already happening. That will take the stock down another 90% on top of the multiple crashes that have already occurred.

The German government will let Deutsche Bank stock fall to €2 before they intervene. That’s how existing stockholders make their “contribution” to the bail-in.

Deutsche Bank won’t fail and the stock won’t go to zero. But there’s still plenty of room to fall, and this story is far from over. The eurozone is in trouble.
http://dailyreckoning.com/deutsche-bank-nears-collapse/
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Old 10-03-2016, 11:18 AM   #6
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It seems Rome (us) is not the only one falling. If the whole world falls along side us, do we still get to be in charge?
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Old 11-29-2018, 08:04 AM   #7
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Already a melting ice cube struggling with an overbearing derivatives exposure and myriad legal risks, Deutsche Bank has seemingly bounced from one criminal scandal to the next since the crisis, incurring billions of dollars in fines along the way. So it's hardly surprising that the bank's shareholders let out a collective groan Thursday morning when headlines hit that German police had raided the bank's Frankfurt headquarters.

Roughly 170 police officers, tax inspector and prosecutors fanned out across Frankfurt to search a total of 6 DB buildings, according to the BBC, sending the bank's shares lower by 2% to near all-time lows amid renewed fears that DB could face a devastating, potentially bankruptcy-inducing, fine.
...
https://www.zerohedge.com/news/2018-...t-headquarters
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Old 11-30-2018, 08:15 AM   #8
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Reeling from a Morgan Stanley downgrade of European Banks and a second day of raids on its Frankfurt headquarters, Deutsche Bank shares declined by another 3% on Friday to a new all time low just above €8, bringing the YTD loss to 50%.
...
More: https://www.zerohedge.com/news/2018-...-all-time-lows
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Old 11-30-2018, 01:23 PM   #9
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time to buy ?

They cannot let DB fail. It really is TBTF or they have to let the whole charade collapse.

Then how will they 'value' anything ?
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Old 12-03-2018, 08:13 AM   #10
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I'm guessing the ECB or similar will "encourage" another banking giant to buy DB assets at pennies on the dollar euro ala The Fed/JPM/Bear Stearns.
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Old 12-04-2018, 06:16 AM   #11
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why would any other bank take on the DB risk, including the impossibly large derivatives risk ?

Sure they would grab their assets but who would carry the liabilities ?
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Old 12-04-2018, 08:24 AM   #12
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Well, I'm sure another bank could be persuaded to do so if they get a sweetheart deal with ECB/taxpayer backstopping. Happened here in the USA with the bank bailouts after Lehman. People got mad and had tea parties. A few politicians got voted out of office, but little really changed. Political class in Europe may feel like it's worth the risk (of public ire).
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Old 12-04-2018, 12:04 PM   #13
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When Lehman went down it was the derivative bets that caused the problem
I believe this was the first time the committee sat and declered there was no default, because any default would have taken everything.
Monoline risk insurer AMA was obviously in default though......

And now DB's derivative bets going bad would be larger than Germany or the EU bank could handle.
Printing the odd quadrilloin with no consequences ?

Do you really think the few billions that the tax payers could contribute would fix it ?

And would they all just roll over and once again give the additional money required to 'save the banks' ?
Fool me once .......

They seem a bit pissed right now with a few cents rise on diesel fuel .........
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Last edited by rblong2us; 12-04-2018 at 12:08 PM. Reason: punctuation and spling
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Old 12-05-2018, 07:37 AM   #14
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If DB goes under, we all go under. The derivatives they hold are all intertwined with all the other derivatives the other octopuses hold, and purposefully so. They want to be sure that if one goes, we all go. That way, none will be let to fail.
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Old 12-05-2018, 08:00 AM   #15
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Quote :
...
What’s next?

Prosecutors have said they’ve made “very rapid and very good progress” during the raids and Deutsche Bank has said it’s cooperating “comprehensively.” Prosecutors are scheduled to meet with Deutsche Bank’s lawyers Friday for talks over their initial findings and whether more information will be needed. Still, the review of the papers collected in the raids could take several months.

The next thing to watch is the fallout for Deutsche Bank’s management board. The lender, which has also drawn scrutiny in recent weeks for its role in a dirty money scandal at Danske Bank A/S, was considering replacing Chief Regulatory Officer Sylvie Matherat even before the latest developments. It has long been in the spotlight for deficiencies in money laundering controls — which fall into a unit ultimately headed by Matherat — and the raids certainly don’t help. Deutsche Bank’s supervisory board is scheduled to meet Thursday.
http://fortune.com/2018/12/04/deutsche-bank-raids/
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Old 12-07-2018, 09:12 AM   #16
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Deutsche Bank shares have continued to break through successive all-time lows following news that Frankfurt prosecutors are pursuing charges against DB employees (and possibly the bank itself) over allegations that the bank's wealth management unit helped launder money for criminals and other tax cheats ...

... on Thursday, press reports added another $35 billion to that figure. According to the Financial Times, which cited an internal DB memo, Deutsche cleared a total of nearly $200 billion for Danske's Estonian branch between 2007 and 2015. This means that Deutsche Bank cleared more than 4/5ths of the purportedly suspicious funds flowing out of the Danish bank's Estonian branch. Over the eight year period, DB processed some 1 million transactions, according to the memo, and never once bothered to question the provenance of these massive sums of money, which dwarfed the annual GDP of Estonia.
...
https://www.zerohedge.com/news/2018-...ds-danske-bank
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Old Today, 09:04 AM   #17
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Quote :
Deutsche Bank (DB) shares were marked modestly higher Monday, even as stocks around the region drifted lower, following a German media report that suggested the troubled lender could be merged with domestic rival Commerzbank AG (CRZBY).
...
https://www.thestreet.com/amp/invest...tion--14804954

Let me wave my magic merger wand and all legal and financial troubles go "poof!".
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