Deutsche Bank craters

[chiang mai]

7 hours ago, midas said:

 

 

" but more a case of understanding what is being said by who and why and what part any story plays in the bigger picture "

 

  more a case of who will bear the consequences of this ongoing criminality  ?

 

 

 

Once again, the underlying causes of DB's position today are vested in the events of 2008 which were never fully resolved, if you want a scapegoat then perhaps look West to Wall Street maybe or even to the Bundersbank for not doing their job. The bigger problem today is that now the media froth has bubbled, all manner of doom and gloom stories are circulating and few if any banks will do business with DB for fear of contagion, it's almost a self fulfilling prophesy that DB will go under, but if it does will it all be DB's fault, I'm not convinced. But on a more positive note, Jamie Dimon reckons DB can sort out its problems and survive then thrive, but only if they are allowed, (by the media perhaps).

[fletchsmile]

16 hours ago, midas said:

 

 

"  Sorry but your average accountant or even FD of this type of company hasn't a clue in this field  "

 

Then how about a  Professor of Finance and Economics  ?

 

Professor Kevin Dowd, Professor of Finance and Economics at Durham University Business School and a partner in Cobden Partners based in London  suggests that Deutsche Bank derivatives exposure is difficult to assess rationally; the value of its derivatives book

 

 

“is unreliable because many of its derivatives are valued using unreliable methods. Like many banks, Deutsche uses a three-level hierarchy to report the fair values of its assets. The most reliable, Level 1, applies to traded assets and fair-values them at their market prices. Level 2 assets (such as mortgage-backed securities) are not traded on open markets and are fair-valued using models calibrated to observable inputs such as other market prices. The murkiest, Level 3, applies to the most esoteric instruments (such as the more complex/illiquid Credit Default Swaps and Collateralized Debt Obligations) that are fair-valued using models not calibrated to market data – in practice, mark-to- myth. The scope for error and abuse is too obvious to need spelling out.”

 

 

Well first off, the guy is obviously more objective and not peddling his own website or wares, which is a good start 

 

Secondly, based only on what's quoted here, he has some reasonable perspectives:

- It is a difficult area, and not perfect. Any one of the major stakeholders in the industry would agree with that, whether bankers, accountants, auditors, regulators, risk professionals etc. 

- There is scope for error and abuse in a non-perfect system. (Then again you could say that about anyone, any business etc.)

 

There are some mitigating factors though, such as in controls, regulations, limits etc, not covered in the quote. But even these won't make it perfect.

 

"Mark-to-myth" is something of an exaggeration, but a reasonable point that sometimes it is difficult to use transparent market prices.

 

Two points in particular make his writings much more sensible than the ramblings and quotes you've used so far:

 

1) He has actually split them into 3 levels. Too many journalists and ignorant people write about all derivatives as the same, as though they were all level 3 assets and all OTC rather than some of them exchange traded, or with collateral, or with netting agreements etc. i.e sensibly recognises that there are differences and not all the trillions of notionals are the same

 

2) Most importantly, nowhere does he talk about potential losses being the size of the total gross notional amounts. This is in stark contrast to the previous garbage, from websites and gold pedlars who don't know what they're talking about.

 

There are issues in the industry. Deutsche has some of the worst of these issues. But to repeat: talking about the gross notionals as the amount of loss in the way people do to peddle their own agendas and wares is just ridiculous. That's the bit I take issue with.

 

Cheers

Fletch :)

 

 

[midas]

Deutsche Bank CEO Returns Home Empty-Handed After Failing To Reach 'Deal' With DOJ: Bild

 

Germanys  Bild confirms the rumors that sparked weakness on Friday: Deutsche bank CEO John Cryan has failed to reach an agreement with the US Justice Department.

 

 

http://www.bloomberg.com/news/articles/2016-10-08/deutsche-bank-s-cryan-doesn-t-reach-accord-with-u-s-bild-says

 

 

 

http://www.bild.de/geld/wirtschaft/deutsche-bank/dax-unternehmen-wollen-bank-finanziell-helfen-48176640.bild.html

Edited October 9, 2016 by midas

[midas]

Moody’s: Deutsche Bank Is Dangerously Close To Falling Below Its “Default Point”

 

Quote

Moody’s Capital Markets Research issued a damning verdict on Deutsche Bank earlier this week. In a research report put together by the credit agency’s ‘Analytics’ research division, Moody’s analysts write that Deutsche Bank AG (NYSE:DB) expected default frequency remains at one of the highest levels in the banking industry, despite the bank’s efforts to shore up its capital position

 

 

 

 

http://www.valuewalk.com/2016/10/moodys-deutsche-bank-danger/