Looks like Europe's problems are just beginning

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The economy of Germany is one of the primary drivers for the whole EU economy. Germany's largest bank is experiencing some serious problems.

Started earlier this year - from February 25th, 2019 - CCN News:

Failing Deutsche Bank Lost $1.6 Billion, Conspired to Hide Bond Bet Gone Wrong
Germany’s largest lender Deutsche Bank is in the news again for the wrong reasons. According to the Wall Street Journal, Deutsche Bank lost approximately $1.6 billion over a decade in a bond bet gone awry.

Interestingly, Deutsche Bank has never publicly revealed the loss. This is likely to generate controversy over the bank’s corporate governance structures. As recently as last year the possibility of restating past financial results to reflect the loss was discussed. However, this proposal was shot down.

Fast forward to June 17th, 2019 - Forbes:

Deutsche Bank's Latest Restructuring Plan Fails To Impress
Since the failure of merger talks with Commerzbank, there has been speculation that Deutsche Bank would embark on a major restructuring in the hopes of restoring its fortunes. Now, details are beginning to emerge. According to the Financial Times, the bank’s chief executive, Christian Sewing, plans to create a “bad bank” into which will be placed up to €50bn ($56.18bn) of poorly performing assets, mostly from the troubled U.S. investment bank. The bank also intends to make further deep cuts to its investment bank, and pivot to a new focus on transaction banking and wealth management.

And then there is this - from July 17th - Zero Hedge:

Bank Run: Deutsche Bank Clients Are Pulling $1 Billion A Day
There is a reason James Simons' RenTec is the world's best performing hedge fund - it spots trends (even if they are glaringly obvious) well ahead of almost everyone else, and certainly long before the consensus.

That's what happened with Deutsche Bank, when as we reported two weeks ago, the quant fund pulled its cash from Deutsche Bank as a result of soaring counterparty risk, just days before the full - and to many, devastating - extent of the German lender's historic restructuring was disclosed, and would result in a bank that is radically different from what Deutsche Bank was previously (see "The Deutsche Bank As You Know It Is No More").

In any case, now that RenTec is long gone, and questions about the viability of Deutsche Bank are swirling - yes, it won't be insolvent overnight, but like the world's biggest melting ice cube, there is simply no equity value there any more - everyone else has decided to cut their counterparty risk with the bank with the €45 trillion in derivatives, and according to Bloomberg Deutsche Bank clients, mostly hedge funds, have started a "bank run" which has culminated with about $1 billion per day being pulled from the bank.

As a result of the modern version of this "bank run", where it's not depositors but counterparties that are pulling their liquid exposure from DB on fears another Lehman-style lock up could freeze their funds indefinitely, Deutsche Bank is considering how to transfer some €150 billion ($168 billion) of balances held in it prime-brokerage unit - along with technology and potentially hundreds of staff - to French banking giant BNP Paribas.

And now this from last Tuesday, November 5th, 2019 - Zero Hedge again:

The Deutsche Bank Death Watch Has Taken A Very Interesting Turn
Authored by Michael Snyder via The Economic Collapse blog,
The biggest bank in Europe is in the process of imploding, and there are persistent rumors that the final collapse could happen sooner rather than later.  Those that follow my work on a regular basis already know that this is a story that I have been following for years.  Deutsche Bank is rapidly bleeding cash, they have been laying off thousands of workers, and the vultures have been circling as company executives desperately try to implement a turnaround plan.  Unfortunately for Deutsche Bank, it may already be too late.  And if Deutsche Bank goes down, it will be even more catastrophic for the global financial system than the collapse of Lehman Brothers was in 2008.  Germany is the glue that is holding the EU together, and so if the bank that is right at the heart of Germany’s financial system collapses, the dominoes will likely start falling very rapidly.

Much more at the site - things are so bad that they cancelled the Christmas party for their retired executives

This bodes poorly for Europe - I hope that England can Brexit before it all comes crashing down around their ears.

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This page contains a single entry by DaveH published on November 8, 2019 5:42 PM.

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