Deutsche Bank in the storm, to Berlin and Frankfurt, inaction is not an option – The Sun 24 Hours

FRANKFURT am main. By our correspondent
For the third time from the beginning of 2016, Deutsche Bank is hit by the violent turbulence of the market. The first was at the turn of January and February, when markets were even placed in doubt the capacity of the largest German bank to pay the coupons on its subordinated debt, the second in July, the third in these hours. The reason behind this last storm is the request of the Department of Justice of the United States a fine of $ 14 billion for misconduct in the sale of securities securitized, which has raised many doubts on the adequacy of provisions, and then of the share capital of Deutsche Bank. Many hedge funds have taken short positions on shares, and others have suspended or reduced their activities with the bank.

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The deeper causes of the malaise of the bank must however be looked for elsewhere. The latest legal tussle in the United States is not yet another of a long series of legal disputes and scandals, which have not yet seen the end, nor is it possible to quantify fully the scope for the accounts of Deutsche Bank. More fundamentally, investors today are very skeptical on the future of the bank, also because they do not see a defined strategy to take her out of the ford. The chief executive officer John Cryan, who took office more than a year ago with the hunger of the cutter of costs, not yet managed to convince the markets. Even this morning, its assurances in a letter to employees that the bank is solid under the equity profile and liquidity, and that the whole is the product of a "wrong perception", may not be enough.

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beyond that, which will make the summit of the bank, there are concerns now about what role you could play the German policy. A year before the elections, any public aid to banks could prove to be toxic for the chancellor Angela Merkel, and this limits the options. An opinion poll just released reveals that 70% of the respondents is contrary to put public money into the banks. It should not be forgotten that Germany was the Country that has mostly used taxpayers ‘ money to bring fuoi by the crisis, their banks in 2008-2009. On the other hand, the Government can hardly afford to see slip into the disaster or the collapse of the largest institute of the Country, that over all, as it has supported recently the international monetary Fund, is what the potential systemic impact greatest in the world for its interconnection.
The problem may then go beyond Deutsche Bank, and involve the financial stability of Germany and of Europe. For Berlin and Frankfurt, inaction is not an option.

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