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

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

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.

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 shares slump 15% in resurgence of European bank worries. Latest bout of stress comes days after Credit Suisse rescue. pic.twitter.com/fIxalQzE7H

— Holger Zschaepitz (@Schuldensuehner) March 24, 2023

“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.”

NEW: Deutsche Bank shares CRASH 📉🔻 pic.twitter.com/qBx0PzhKkL

— Bitcoin News ⚡ (@BitcoinNewsCom) March 24, 2023

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.

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: pic.twitter.com/FaxNmSW5Pr

— Lisa Abramowicz (@lisaabramowicz1) March 24, 2023

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.

STOXX Europe 600 on Friday

STOXX Europe 600 on Friday

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.

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 shares slump 15% in resurgence of European bank worries. Latest bout of stress comes days after Credit Suisse rescue. pic.twitter.com/fIxalQzE7H

— Holger Zschaepitz (@Schuldensuehner) March 24, 2023

“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.”

NEW: Deutsche Bank shares CRASH 📉🔻 pic.twitter.com/qBx0PzhKkL

— Bitcoin News ⚡ (@BitcoinNewsCom) March 24, 2023

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.

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: pic.twitter.com/FaxNmSW5Pr

— Lisa Abramowicz (@lisaabramowicz1) March 24, 2023

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.

STOXX Europe 600 on Friday

STOXX Europe 600 on Friday

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.

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