The German bank's shares plunged 15 percent on Friday.
It came after the bank's credit default swaps jumped higher.
German lending giant Deutsche Bank faces a massive sell-off on Friday, resulting in a double-digit plummet in its shares, which came in the aftermath of the troubles at Credit Suisse.
Crisis at Deutsche Bank?
The Germany-listed stocks went down by 15 percent on Friday morning, making it the third consecutive day when the shares of the bank retreated, losing a fifth of its value in March alone. The US-listed stocks of the German bank decreased by more than 6 percent within a few hours of the market opening on Friday.
"Deutsche Bank is under pressure now. People are repositioning, unloading weak links. People want to avoid anything that could come under focus," Jon Jonsson, a Credit Portfolio Manager at Neuberger Berman, told The Wall Street Journal.
"I don't think there's any immediate concern on Deutsche Bank, but things are moving quite rapidly these days. It's certainly a bank that has struggled with profitability for a long time."
The troubles for the German lender came as its credit default swaps, a form of insurance for a company's bondholders against its default, jumped to 173 basis points late Thursday from 142 basis points the previous day. Meanwhile, the price of one of the bank's additional tier 1 (AT1) bonds traded at an all-time low value.
Other European banks also faced the Friday sell-off that pushed the STOXX Europe 600 down 1.75 percent as of press time. The German lender, Commerzbank dropped 9 percent, while Barclays and BNP Paribas increased 6 percent each. Credit Suisse, Societe Generale, and UBS each shed over 7 percent of their market value.
Deutsche Bank has not reached market performance yet, but the recent banking sector troubles in neighboring Switzerland left the investors open to all types of speculations.
European Banking Uncertainty Remains
Credit Suisse, a 167-year-old Swiss banking institution that stood strong throughout the 2008 financial crisis, was recently acquired by its local rival UBS at a discounted price of $3.5 million, leaving Credit Suisse shareholders at a tremendous loss.
Though the UBS-Credit Suisse deal was expected to stabilize the European banking market, it brought havoc as the Swiss financial market regulator decided to write off $17 billion in AT1 bonds. Only UBS emerged as the sole beneficiary from the acquisition as the merged group will be a banking mammoth with over $5 trillion in total invested assets.
Unlike Credit Suisse, Deutsche Bank's financials are strong as the bank reported ten straight quarters of profit following a restructuring at the beginning of 2019 that reduced costs and improved profitability. Its annual income in 2022 jumped 159 percent to $5.4 billion.
German lending giant Deutsche Bank faces a massive sell-off on Friday, resulting in a double-digit plummet in its shares, which came in the aftermath of the troubles at Credit Suisse.
Crisis at Deutsche Bank?
The Germany-listed stocks went down by 15 percent on Friday morning, making it the third consecutive day when the shares of the bank retreated, losing a fifth of its value in March alone. The US-listed stocks of the German bank decreased by more than 6 percent within a few hours of the market opening on Friday.
"Deutsche Bank is under pressure now. People are repositioning, unloading weak links. People want to avoid anything that could come under focus," Jon Jonsson, a Credit Portfolio Manager at Neuberger Berman, told The Wall Street Journal.
"I don't think there's any immediate concern on Deutsche Bank, but things are moving quite rapidly these days. It's certainly a bank that has struggled with profitability for a long time."
The troubles for the German lender came as its credit default swaps, a form of insurance for a company's bondholders against its default, jumped to 173 basis points late Thursday from 142 basis points the previous day. Meanwhile, the price of one of the bank's additional tier 1 (AT1) bonds traded at an all-time low value.
Other European banks also faced the Friday sell-off that pushed the STOXX Europe 600 down 1.75 percent as of press time. The German lender, Commerzbank dropped 9 percent, while Barclays and BNP Paribas increased 6 percent each. Credit Suisse, Societe Generale, and UBS each shed over 7 percent of their market value.
Deutsche Bank has not reached market performance yet, but the recent banking sector troubles in neighboring Switzerland left the investors open to all types of speculations.
European Banking Uncertainty Remains
Credit Suisse, a 167-year-old Swiss banking institution that stood strong throughout the 2008 financial crisis, was recently acquired by its local rival UBS at a discounted price of $3.5 million, leaving Credit Suisse shareholders at a tremendous loss.
Though the UBS-Credit Suisse deal was expected to stabilize the European banking market, it brought havoc as the Swiss financial market regulator decided to write off $17 billion in AT1 bonds. Only UBS emerged as the sole beneficiary from the acquisition as the merged group will be a banking mammoth with over $5 trillion in total invested assets.
Unlike Credit Suisse, Deutsche Bank's financials are strong as the bank reported ten straight quarters of profit following a restructuring at the beginning of 2019 that reduced costs and improved profitability. Its annual income in 2022 jumped 159 percent to $5.4 billion.
Arnab is an electronics engineer-turned-financial editor. He entered the industry covering the cryptocurrency market for Finance Magnates and later expanded his reach to forex as well. He is passionate about the changing regulatory landscape on financial markets and keenly follows the disruptions in the industry with new-age technologies.
RBC Capital Markets Slapped with $375,000 Fine for Alleged Trade Confirmation Blunders
Network, Learn, Grow | FMAS:24
Network, Learn, Grow | FMAS:24
Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
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Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
Don't miss out on this 5-second invite packed with energy and urgency!
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Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africaโs premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
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Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africaโs premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now ๐ https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
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Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
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Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
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Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
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Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
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