After their actions desplomaran this week, the president of the organization said that the finances of the firm are “strong”; how it could impact his downfall in the rest of the world
last month, The International Monetary Fund (IMF), described by Deutsche Bank as “the bank most dangerous in the world”. And from then on, the threat of the lender, Germany’s largest, the most powerful country of Europe, seems to be increasing.
This week the bank’s shares touched an all-time low amid concerns about its stability: on Friday, lost more than 8% of its value and declined for the first time of the mark of 10 euros (US$ 11).
In this year the listing of the bank has already fallen by about 58% from its highest value in recent months, US$ 31 last November. In may 2007, before the fall of the banking crisis, is listed in almost US$ 111.
Some analysts claim that the new decline on Friday, due to information disseminated in the media that ensures that some funds of risk capital are withdrawing funds from Deutsche Bank.
on Friday, the president of the institution, John Cyran, tried to reassure its 100,000 employees with an e-mail that ensures that the finances of the firm are robust and reduce the importance of the claims of the media.
“In some media can be read rumors that some venture capital funds we have left,” says Cryan. “We have to consider the whole picture of the bank -he added-. The Deutsche Bank has more than 20 million customers. Continue working as until now, we are and will remain a bank deposit”.
Cryan also speaks of “forces” that want to “undermine confidence” in the bank, with a “distorted perception” that is causing the fall of the shares. However, the troubled situation of the Deutsche Bank only seems to confirm that the firm has become the weakest link in the chain of major financial institutions in the world.
Fine
The immediate cause of this crisis is a fine of US$ 14,000 million from the Department of Justice of the united States for sales of mortgage-backed securities before the financial crisis of 2008.
And investors are increasingly concerned about their stability and they seem to be reacting to the reports that are published in German media that chancellor Angela Merkel has ruled out a package of state financial aid to the institution.
In reality, the position of the German government is not clear. Earlier this week, reports arose that the authorities were preliminary arrangements for the rescue of Deutsche, which is politically unpopular. But Eckhardt Rehberg, spokesman of the budget commission of the Parliament belonging to the CDU of Merkel, indicated that it will oppose any help. As he said to Reuters: “At this point, I ruled out any capital assistance. That would not be the right way.”
The problems of Deutsche are having an impact on the banking on values in the whole of Europe, with losses of up to 4% in the shares of entities british as Barclays and Royal Bank of Scotland, citing a few cases.
global Risk
Deutsche is much smaller than its rivals on Wall Street, like JP Morgan and Citigroup. But has commercial ties with all the leading financial institutions in the world. And fears about the stability of the main bank of the largest economy of Europe is bringing back memories of the financial crisis of 2008.
Deutsche, which was once described as “the great beast of the world bank”, is not in a position to withstand the shock of the penalty that he faces in the united States. As explained in Simon Jack, business editor of the BBC, the sanction “is almost triple of the amount that Deutsche had set apart for that purpose, and put its finances, already weakened, under immense pressure”.
“No one expects that Deutsche pay this sum of money, but even half that would mean a serious problem,” says Jack. What is the largest creditor of Germany needs, posed by the editor of the BBC, is more capital and this can only arise from three sources.
Options
One of them, which has already started to process, is the sale of their shares. To the end of the year, is expected to sell its percentage share in a chinese bank. But with this only would raise about$ 4000.
Another source of income is to sell more of their titles. “This only would further reduce the present value of their actions and this is something that until now has resisted John Cryan, because it would be another bitter pill for investors who have already been swallowed massive losses”, says Simon Jack.
The third option, and apparently growing more remote, is the help of the German government. Eight years after the banking crisis would be a measure extremely unpopular, and perhaps even illegal under the regulations of the united States.
More dangerous
experts, however, expect that there is some kind of agreement to help the bank. One of them is the possibility of a possible merger with its main rival, Commerzbank, which also has its own financial problems.
The second lender in Germany, announced plans to cut nearly 9000 jobs, a 20% of its workforce, to carry out a modernization in times in which, like the rest of the european banks, facing interest rates very low or negative.
The other possibility, say analysts, is that the German government put pressure on the us authorities to reduce the fine. If all of these options are discarded or fail, the bank, the more dangerous the world will become really dangerous.
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