Deutsche bank (DBK) shares dropped to fresh new lows with the various news announcements, as well as a feeling that Germany will not be capable of bailing out the bank. The imminent outcome for DBK is ‘bankruptcy’ while the world will have to bear the brunt of the fallout from all of the complicated ‘derivatives’ which are being held by Deutsche Bank.
DBKs’ outstanding ‘derivatives’ exposure is 20x the German GDP and 5x the Eurozone GDP.
Amongst all of the chaos, DBKs’ head of currencies trading and emerging-markets debt trading, Ahmet Arinc, has left the company which is the most recent negative news to impact the banks’ financial status. Traders slammed the stock by more than 6% during that trading session, to touch intraday lows of $12.5 after which the stock recovered marginally to close at $12.97.Â
Germany will not be able to bail out DBK:
The latest bank which might require a bailout is the Italian lender Banca Monte dei Paschi di Siena which is the worlds’ oldest bank. The European Central Bank warned that the Italian bank is holding dangerously high levels of bad debt.
Italy wants a bailout for Monte Paschi, however, the Germans are opposing any such move. Wolfgang Schaeuble, the German Finance Minister, stated in a news conference, in Berlin, that Italy intends to stick to the banking-union rules, as was conveyed to him by his Italian Counterpart, Pier Carlo Padoan.
Italian Prime Minister hits back at Germany:
However, Italy did not wait before hitting back at Germany and it came from none other than the Italian Prime Minister, Matteo Renzi.
Mr. Renzi stated that “the difficulties facing Italian banks over their bad loans are miniscule by comparison with the problems some European banks face over their derivatives.†He reminded the Germans that there were other European banks which had much bigger problems than Monte Paschi, in an indirect hint towards DBK.
