German Crisis? Deutsche Bank Shares Plummet amid Spike in Default Insurance

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German Crisis? Deutsche Bank Shares Plummet amid Spike in Default Insurance

<p>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. </p><p>Crisis at Deutsche Bank?</p><p>The <a href="https://www.financemagnates.com/institutional-forex/deutsche-banks-project-teal-probe-on-fx-mis-selling-to-end-after-3-years/" target="_blank" rel="follow">Germany-listed stocks</a> 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.</p><blockquote class="twitter-tweet"><p lang="en" dir="ltr">Deutsche Bank shares slump 15% in resurgence of European bank worries. Latest bout of stress comes days after Credit Suisse rescue. <a href="https://t.co/fIxalQzE7H">pic.twitter.com/fIxalQzE7H</a></p>-- Holger Zschaepitz (@Schuldensuehner) <a href="https://twitter.com/Schuldensuehner/status/1639225088640729088?ref_src=twsrc%5Etfw">March 24, 2023</a></blockquote><p>"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.</p><p>"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."</p><blockquote class="twitter-tweet"><p lang="en" dir="ltr">NEW: Deutsche Bank shares CRASH 📉🔻 <a href="https://t.co/qBx0PzhKkL">pic.twitter.com/qBx0PzhKkL</a></p>-- Bitcoin News ⚡ (@BitcoinNewsCom) <a href="https://twitter.com/BitcoinNewsCom/status/1639221270503129090?ref_src=twsrc%5Etfw">March 24, 2023</a></blockquote><p>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.</p><blockquote class="twitter-tweet"><p lang="en" dir="ltr">There's still some concern about the banks, both in the U.S. as well as some of the larger ones in Europe. Deutsche Bank credit-default swaps are still blowing out: <a href="https://t.co/FaxNmSW5Pr">pic.twitter.com/FaxNmSW5Pr</a></p>-- Lisa Abramowicz (@lisaabramowicz1) <a href="https://twitter.com/lisaabramowicz1/status/1639189309428482049?ref_src=twsrc%5Etfw">March 24, 2023</a></blockquote><p>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.</p><p>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. </p><p>European Banking Uncertainty Remains</p><p>Credit Suisse, a 167-year-old Swiss banking institution that stood strong throughout the 2008 financial crisis, was recently <a href="https://www.financemagnates.com/institutional-forex/ubsagreed-to-buy-troubled-rival-credit-suisse/" target="_blank" rel="follow">acquired by its local rival UBS </a>at a discounted price of $3.5 million, leaving Credit Suisse shareholders at a tremendous loss.</p><p>Though the UBS-Credit Suisse deal was expected to stabilize the European banking market, it brought havoc as the Swiss financial market regulator<a href="https://www.financemagnates.com/institutional-forex/ubs-credit-suisse-deal-brings-havoc-to-global-markets/" target="_blank" rel="follow"> decided to write off $17 billion in AT1 bonds</a>. 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.</p><p>Unlike <a href="https://www.financemagnates.com/tag/credit-suisse/" target="_blank" rel="follow">Credit Suisse</a>, 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.</p>

This article was written by Arnab Shome at www.financemagnates.com.

Source: German Crisis? Deutsche Bank Shares Plummet amid Spike in Default Insurance