 Is Deutsche Bank the next Lehman?

[midas]

"Worse than Lehman" is how one European bond market trader described the carnage this week as the brief respite that ECB monetization and debt-buyback rumors provided yesterday have morphed into utter destruction this morning. European (and US) banks are a sea of contagious red with Deutsche Bank the tip of the collapse spear. Credit risk on Deutsche has exploded this morning with Sub CDS trading up 85bps to a record high 540bps... eerily reminiscent of the pre-Lehman bankruptcy week in 2008.

Time to panic now?

http://www.zerohedge.com/news/2016-02-11/deutsche-bank-back-5-year-cds-soar-record-high

Edited February 11, 2016 by midas

[cheeryble]

Wow is this paranoia thread still going?

I seem to remember a certain poster's thrust being that nothing had changed in he banking industry.

Sir John Vickers has just criticized the Bank of England for not fulły implementing the ICB's proposals for reform, but arse-versely if you read the rebuffs it is clear there has been enormous change. Read on:

JOHN VICKERS SAYS BANKS STILL NEED MORE CAPITAL

Sir John Vickers

Britain’s banks should be forced to beef up their financial buffers as they do not yet hold sufficient capital to stay safe in a downturn, according to Sir John Vickers, the person responsible for large swathes of the current regulatory system.

But Sir John disagrees, and in a series of articles and interviews across the BBC, the Financial Times and Vox has claimed the Bank of England has failed to properly implement the plans he spelled out in a landmark report on banking regulation released in 2011.

Bank of England governor Mark Carney believes big banks do now have enough capital to survive a recession, though he does want them to hold a little more

Sir John chaired the Independent Commission on Banking (ICB), which recommended big capital buffers, comprehensive plans to wind-down the non-essential parts of big banks in the event of a collapse, and the ring-fencing regime that is designed to separate retail banking operations from each bank’s investment banking arm.

He is now criticising the UK authorities for not fully implementing those recommendations. “The Bank of England is proposing substantially milder equity requirements for British banks than did the ICB. The wisdom of this policy is questionable,” he wrote in the FT.

The ICB wanted British banks to have substantially larger capital buffers than required by global regulators but the Bank of England has demanded more modest increases.

“Given the awfulness of systemic bank failures, ample insurance is needed, and equity is the best form of insurance,” Sir John said.

“The recent volatility in bank stocks underlines the importance of strong capital buffers. The Bank of England should think again.”

Officials have previously noted that banks still need to raise more capital to hit international rules related to total loss-absorbing capacity (TLAC) and minimum requirement for own funds and eligible liabilities (MREL).

Last month, Martin Taylor, an external member of the Bank of England’s Financial Policy Committee and himself a former member of the ICB panel, told MPs that the average buffers of UK banks may be closer to 13pc of their assets than the 11pc they report because of different definitions of bank capital. This may mean lenders are safer than they appear on paper.

At first glance this appears to be below the 18pc demanded by the ICB. However, once bail-in bonds - such as contingent convertible bonds, which convert to shares or are completely wiped out when a bank gets into trouble - are included, the banks' buffers are already closer to 23pc.

Some of these developments relate to securities which were invented in the years since Sir John's report was published.

Martin TaylorRegulator and former Barclays chief executive Martin Taylor believes banks are on a sound footing, even if Sir John Vickers disagrees Photo: Bloomberg

Mr Taylor also pointed out that bondholders are now on the hook if banks get into financial trouble, which has led to a more realistic pricing of bank credit risk than was the case when the ICB reported in 2011.

Mr Taylor added that Sir John's demands in other areas, such as ring-fencing and stress testing, have also been implemented.

“The kind of work that was done to underscore how much capital the system would be safe with has been greatly advanced and developed since Vickers’ work, but the fundamental answer is not actually very different,” Mr Taylor said.

“From where I sit, that is six out of six [policies demanded and implemented]. I am very happy with the settlement.”

A Bank of England spokesperson said: “The Bank of England continues to support the conclusions of the ICB but is proposing a higher level of capital and overall resilience in the banking system than was proposed by the ICB in their final report. The Bank of England’s proposals reflect the cost of the crisis and the benefits of more resilient banks, the new international standards on bank capital and bank resolution and the more active use of countercyclical tools. This judgment is informed by two years of severe but plausible stress tests. UK banks are now within touching distance of meeting these proposed new standards. On a comparable basis, globally systemic banks in the UK will be required to have ten times more capital than before the crisis.”

Edited February 16, 2016 by cheeryble

[midas]

"Deutsche Bank Poses The Greatest Risk To The Global Financial System": IMF

Not only did Deutsche Bank just flunk the Fed's stress test for the second year in a row but just moments ago in a far more damning analysis, none other than the IMF disclosed that Deutsche Bank poses the greatest systemic risk to the global financial system, explicitly stating that the German bank "appears to be the most important net contributor to systemic risks."

The IMF also said the German banking system poses a higher degree of possible outward contagion compared with the risks it poses internally. This means that in the global interconnected game of counterparty dominoes, if Deutsche Bank falls, everyone else will follow.

http://www.wsj.com/articles/deutsche-bank-poses-greatest-risk-to-global-financial-system-imf-says-1467239405

Edited June 30, 2016 by midas

[midas]

Wow is this paranoia thread still going?

I seem to remember a certain poster's thrust being that nothing had changed in he banking industry.

Sir John Vickers has just criticized the Bank of England for not fulły implementing the ICB's proposals for reform, but arse-versely if you read the rebuffs it is clear there has been enormous change. Read on:

JOHN VICKERS SAYS BANKS STILL NEED MORE CAPITAL

Sir John Vickers

Britain’s banks should be forced to beef up their financial buffers as they do not yet hold sufficient capital to stay safe in a downturn, according to Sir John Vickers, the person responsible for large swathes of the current regulatory system.

But Sir John disagrees, and in a series of articles and interviews across the BBC, the Financial Times and Vox has claimed the Bank of England has failed to properly implement the plans he spelled out in a landmark report on banking regulation released in 2011.

Bank of England governor Mark Carney believes big banks do now have enough capital to survive a recession, though he does want them to hold a little more

Sir John chaired the Independent Commission on Banking (ICB), which recommended big capital buffers, comprehensive plans to wind-down the non-essential parts of big banks in the event of a collapse, and the ring-fencing regime that is designed to separate retail banking operations from each bank’s investment banking arm.

He is now criticising the UK authorities for not fully implementing those recommendations. “The Bank of England is proposing substantially milder equity requirements for British banks than did the ICB. The wisdom of this policy is questionable,” he wrote in the FT.

The ICB wanted British banks to have substantially larger capital buffers than required by global regulators but the Bank of England has demanded more modest increases.

“Given the awfulness of systemic bank failures, ample insurance is needed, and equity is the best form of insurance,” Sir John said.

“The recent volatility in bank stocks underlines the importance of strong capital buffers. The Bank of England should think again.”

Officials have previously noted that banks still need to raise more capital to hit international rules related to total loss-absorbing capacity (TLAC) and minimum requirement for own funds and eligible liabilities (MREL).

Last month, Martin Taylor, an external member of the Bank of England’s Financial Policy Committee and himself a former member of the ICB panel, told MPs that the average buffers of UK banks may be closer to 13pc of their assets than the 11pc they report because of different definitions of bank capital. This may mean lenders are safer than they appear on paper.

At first glance this appears to be below the 18pc demanded by the ICB. However, once bail-in bonds - such as contingent convertible bonds, which convert to shares or are completely wiped out when a bank gets into trouble - are included, the banks' buffers are already closer to 23pc.

Some of these developments relate to securities which were invented in the years since Sir John's report was published.

Martin TaylorRegulator and former Barclays chief executive Martin Taylor believes banks are on a sound footing, even if Sir John Vickers disagrees Photo: Bloomberg

Mr Taylor also pointed out that bondholders are now on the hook if banks get into financial trouble, which has led to a more realistic pricing of bank credit risk than was the case when the ICB reported in 2011.

Mr Taylor added that Sir John's demands in other areas, such as ring-fencing and stress testing, have also been implemented.

“The kind of work that was done to underscore how much capital the system would be safe with has been greatly advanced and developed since Vickers’ work, but the fundamental answer is not actually very different,” Mr Taylor said.

“From where I sit, that is six out of six [policies demanded and implemented]. I am very happy with the settlement.”

A Bank of England spokesperson said: “The Bank of England continues to support the conclusions of the ICB but is proposing a higher level of capital and overall resilience in the banking system than was proposed by the ICB in their final report. The Bank of England’s proposals reflect the cost of the crisis and the benefits of more resilient banks, the new international standards on bank capital and bank resolution and the more active use of countercyclical tools. This judgment is informed by two years of severe but plausible stress tests. UK banks are now within touching distance of meeting these proposed new standards. On a comparable basis, globally systemic banks in the UK will be required to have ten times more capital than before the crisis.”

As much precision as your Economic forecasting regarding Greece

Edited June 30, 2016 by midas

[midas]

World's Most Systemically Dangerous Bank Crashes Back To Record Lows

Edited June 30, 2016 by midas

[midas]

Jim Willie: If Deutsche Bank Goes Under It Will be Lehman TIMES FIVE!

" Deutsche Bank is involved very closely with all of the Eurozone currencies and bonds, and they have massive swaps interwoven with all the major Western banks.

I have a client informing me that Deutsche Bank has a bunch of swaps that they wrote against Detroit muni bonds! Deutsche Bank has their fingers in alot of different pies! Lehman Brothers was involved in numerous mortgage instruments."

http://www.silverdoctors.com/gold/gold-news/jim-willie-if-deutsche-bank-goes-under-it-will-be-lehman-times-five/

Edited July 2, 2016 by midas

[midas]

Meanwhile At The Most Systemically Dangerous Bank In The World...Another day, another fresh record low in Deutsche Bank's stock price...

Edited July 5, 2016 by midas

[midas]

It’s been almost 10 years in the making, but the fate of one of Europe’s most important financial institutions appears to be sealed. But, if the deaths of Lehman Brothers and Bear Stearns were quick and painless, the coming demise of Deutsche Bank has been long, drawn out, and painful

Edited July 10, 2016 by midas

[Naam]

Deutsche Bank scrapes through European banks stress test

http://www.reuters.com/article/us-eu-banks-stresstest-deutsche-bank-idUSKCN1092M7?il=0

[Briggsy]

Any poster who insists on using those weird little squares tends to be more form over substance. So, I give little weight to the content of their post.

[shirtless]

I heard they have big problems with derivatives , and its time to pay

[Naam]

I heard they have big problems with derivatives , and its time to pay

they don't have problems with derivatives but they might have huge problems if the market moves against their derivative bets.

if the latter happens Deutsche Bank's exposure would without any doubt cause a global financial crisis most probably even dwarfing "Lehman 2008". and that is why "those in charge" won't let it happen.

and if "those in charge" had known in september 2008 what risk was in the cards then Lehman would have been quietly taken over as was Bear Sterns six months earlier. the cost would have been a fraction of the losses incurred.

[midas]

I am amused by sweeping blandishments such as “that is why those in charge" won't let it happen .” when no one “ in charge “ is able to give even the slightest hint of how these problems can be tackled.

What can “ those in charge “ possibly do if (or perhaps it’s more accurate to say “ when “) there is a meltdown and a loss of confidence in the central banks? The world economies have never ever before been so intertwined and the world’s leading economy has never before experienced an increase in public and private debt on such a colossal scale from $1.6 trillion in 1971 to $64 trillion now which is 40 times the original amount whereas its nominal GDP has only expanded by 16 times.

Japan the world’s second-largest economy isn’t in much better shape either.

[midas]

I am amused by sweeping blandishments such as “that is why those in charge" won't let it happen .” when no one “ in charge “ is able to give even the slightest hint of how these problems can be tackled.

What can “ those in charge “ possibly do if (or perhaps it’s more accurate to say “ when “) there is a meltdown and a loss of confidence in the central banks? The world economies have never ever before been so intertwined and the world’s leading economy has never before experienced an increase in public and private debt on such a colossal scale from $1.6 trillion in 1971 to $64 trillion now which is 40 times the original amount whereas its nominal GDP has only expanded by 16 times.

Japan the world’s second-largest economy isn’t in much better shape either.

infinity

Get ready for America’s new $29 trillion debt

" Bear in mind that US debt is already $19+ trillion and climbing. The CBO sees at least another $10 trillion in debt in the coming years, and projects that the US budget deficit will increase every single year. "

https://www.sovereignman.com/trends/get-ready-for-americas-new-29-trillion-debt-20038/?inf_contact_key=7f04c8c0fb2fbcbf4963f7d8f92a80b9a21d31cb3a23162abc7f5fab56130f1a

Edited July 30, 2016 by midas

[Naam]

your 7½ year long moaning, bitching, raving and ranting "the sky is falling any time from now" is not amusing but boring

[midas]

On 7/30/2016 at 8:32 AM, Naam said:

Deutsche Bank scrapes through European banks stress test

http://www.reuters.com/article/us-eu-banks-stresstest-deutsche-bank-idUSKCN1092M7?il=0

 

Well the effect of that lasted well.............. how long was that three days? 

 

 

Edited August 3, 2016 by midas

[midas]

On 8/2/2016 at 3:43 PM, Naam said:

your 7½ year long moaning, bitching, raving and ranting "the sky is falling any time from now" is not amusing but boring

 

 

ha ha. I always remember you in the early days of that 7 1/2 years when you said " what financial crisis ",?

I don't think you would know if your posterior was on fire

[DUS]

WE ARE DOOMED! :-)

[Naam]

14 hours ago, DUS said:

WE ARE DOOMED! :-)

 

that goes without saying. but in the meantime we rake in whatever we can

[maewang99]

Deutsche Bank is much more like a Merrill Lynch scenario.... than a Lehman. 

[midas]

so much for the relevance and reliability of " stress tests "

 

 Deutsche Bank Unexpectedly Found To Have Massive Capital Gap, Larger Than Its Entire Market Cap

 

 

Quote

After the ECB concluded its latest annual stress test, which as expected found no problems with Europe's largest banks instead scapegoating Italy's well-known troubled banks in results that were widely discredited by the market, yesterday in an unexpected outcome, German economic research institute ZEW found that Germany's largest bank, Deutsche Bank, had the highest potential capital shortfall, as much as €19 billion in a study of 51 European banks using U.S. Federal Reserve stress test methods. The capital gap is greater than DB's entire market cap. 

 

Quote

A TOP economist has warned that Germany's biggest bank is teetering on the edge of crisis and they only way to protect it against future shocks is to nationalise it.

 

http://www.express.co.uk/news/world/698305/Deutsche-Bank-financial-crisis-EU-Angela-Merkel

[midas]

On 8/5/2016 at 10:07 AM, maewang99 said:

Deutsche Bank is much more like a Merrill Lynch scenario.... than a Lehman. 

 

"  much more like a Merrill Lynch scenario..... "

 

LOL 

 

Did Merrill Lynch have a $72trillion of "derivatives exposure", which is many times greater then the entire German GDP ?

[midas]

Deutsche Bank CEO Warns Of "Fatal Consequences" For Savers

 

 

Quote

 

 

John Cryan, warned in a guest commentary ahead of the Handelsblatt Banking Summit titled, appropriately enough "Banks in Upheaval", to be held in Frankfurt on August 31 and September 1, that “monetary policy is now running counter to the aims of strengthening the economy and making the European banking system safer."

However, his most striking warning was not aimed at Mario Draghi, but at Germany itself - and ostensibly his own clients - implicitly suggesting that if Deutsche Bank goes down it is taking everyone down with it, when, as cited by Bloomberg, he warned of “fatal consequences" for savers and pension plans while “companies refrain from investments due to ongoing uncertainty and demand less loans.”

 

 

 

https://global.handelsblatt.com/edition/499/ressort/finance/article/operation-successful-patient-critical

 

[Ricardo]

On 04/08/2016 at 0:31 PM, Naam said:

 

that goes without saying. but in the meantime we rake in whatever we can

 

Khun Naam,   You da Man  ! 

 

I hope to read your sound-advice on TV for many years to come.

[midas]

Deutsche Bonds "Dropping Like A Stone" As 'Most Dangerous Bank In The World' Plummets

 

 

Quote

 

Deutsche Bank AG’s riskiest bonds plummeted after the German lender received a $14 billion claim from the U.S. Justice Department to settle an investigation into the firm’s sale of residential mortgage-backed securities.

 

“They are dropping like a stone,” said Tomas Kinmonth, a credit strategist at ABN Amro Bank NV in Amsterdam. “The fine, even if reduced, could surpass all provisions held by the bank.”

 

http://www.bloomberg.com/news/articles/2016-09-16/deutsche-bank-riskiest-bonds-sink-as-doj-seeks-14-billion-fine

[midas]

Deutsche Bank Extends Losses Near Record Lows: "Significantly Undercapitalzied... Even Without Bad Outcomes"

 

 

Quote

 

Things are going from worse to worst once again for Deutsche Bank as equity and credit markets deteriorate further as analysts warn Germany's biggest (and the world's most systemically dangerous) bank would be "significantly undercapitalized" even if an eventual settlement with the DoJ can be covered by the bank's reserves. Despite multiple capital raises over the past few years, as Bloomberg notes, any likely settlement would imply a capital increase - just to pay the fine.

Deutsche equity down another 3% this morning, near record lows...

 

 

 http://www.bloomberg.com/news/articles/2016-09-19/deutsche-bank-keeps-falling-on-capital-risk-from-settlements?utm_content=business&utm_campaign=socialflow-organic&utm_source=twitter&utm_medium=social&cmpid%3D=socialflow-twitter-business

[4evermaat]

Doesnt matter. Too big to fail. You'll see some sort of bailout/in soon.

Stay tuned to FinanceFeeds.net and FinanceMagnates.com as they are likely to have breaking news coverage.

[midas]

13 hours ago, 4evermaat said:

Doesnt matter. Too big to fail. You'll see some sort of bailout/in soon.

Stay tuned to FinanceFeeds.net and FinanceMagnates.com as they are likely to have breaking news coverage.

 

 

  How do you think they will deal with Deutsche Bank's €42 trillion of notional derivatives?

It's more than just Deutsche Bank's problem; more than just Germany's problem.

 If something bad happens to DB, it is the whole of Europe's problem

[DUS]

10 minutes ago, midas said:

 

 If something bad happens to DB, it is the whole of Europe's problem

 

No, you are (sort of) wrong. if DB goes t*ts up then it´s not just an European but a global issue that will/would make the Lehman induced crisis look like a walk in a park or a kindergarten party.

Edited September 20, 2016 by DUS

[HenryB]

I buy my Fruit and Vegetables from Julius Rothchild he will known if anyone will and he has secret knowledge with a Group

And he said this Group  wants the top 18 Banks in the EU to Fail so they can take over all the EU Banks  

Edited September 20, 2016 by HenryB
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