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After SVB and Credit Suisse, it is the first German bank, Deutsche Bank, which is in turn attacked by the markets. The title plunged by almost 15% on the Frankfurt stock exchange on Friday March 24, 2023. All European stock market indices followed.
It’s a new blow for the banking sector this Friday, March 24th. Since the start of the banking crisis more than two weeks ago, Deutsche Bank securities have lost around 30%, or 7 billion euros in stock market value, recalls our correspondent in Berlin, Natalie Version.
According to traders, it is above all the rapid rise in the price of coverage against bank defaults that has caused concern in the markets.
In Germany, reassuring comments are multiplying. Financial experts, who believe that Deutsche Bank is able to resist. This bank made its best profit in 15 years in 2022, more than doubled compared to 2021. Olaf Scholz therefore ensures that there is no reason to worry. ” Deutsche Bank has fundamentally modernized its business model and is very profitable “, assured the German Chancellor in Brussels.
Indeed, the bank amply meets the requirements of European regulations: its mandatory capital ratio of 13.4% in relation to risky assets and liquidities of over 250 billion euros must provide the resources to face periods of turbulence.
There remains the concern of many investors of a risk of contagion of the crisis of confidence since the turbulence around Swiss credit.
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A heavy legal past
Deutsche Bank has long made the headlines of financial newspapers with its repeated scandals, before Credit Suisse stole the show. Deutsche Bank was no longer seen as a weak link in the banking system.
In the early 2000s, the unbridled growth of Deutsche Bank made it go through several chaotic years struggling with a series of legal cases: illegal practices, money laundering, rate manipulation. Convictions accompanied by heavy fines are linked. A peak being reached at the beginning of 2017 with 7.2 billion dollars paid to the United States to settle lawsuits for its role in the “subprime” crisis dating from 2007.
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To get out of it, Deutsche Bank resorted to a reduction of around 7,000 jobs announced in 2018, with a reduction in the wing on the capital markets. Then the announcement in July 2019 of 18,000 job cuts and the abandonment of lucrative third-party equity trading.
Meanwhile, talks had been held for a possible merger with the other large German institution Commerzbank, also in bad shape and partly owned by the state. But the threatening social anger, the discussions were quickly buried.
The arrival of Christian Sewing at the head of the bank in April 2018 came after the stock had fallen 30% since January this year, as the markets no longer believed in the group’s recovery. His profile initially questioned: a pure house product having started as an apprentice in an agency of the group, was this retail banking professional the man for the job to raise the bar in investment banking?
Five years later, the now 52-year-old boss is well on his way to winning his bet. His mandate, renewed in advance in 2021, runs until 2026. It was also in 2021 that he was appointed president of the German private banking lobby, accentuating his position with the economic and political world of the country.
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