There is a very real possibility that Deutsche Bank is going down.
If the most prominent bank in Germany fails, the effect on Europe will be profound, and I don’t think the United States will escape the effects. The ripples will turn into a tsunami as they travel across the Atlantic. Already, the bank’s troubles have stressed the American stock market.
Angela Merkel has stated that Deutsche Bank will not be getting a bailout from the European Central Bank – the lender of last resort for European banks.
The Department of Justice recently issued a $14 billion fine to the bank to settle a mortgage-backed securities probe…and the bank has no intention of paying.
“Deutsche Bank has no intent to settle these potential civil claims anywhere near the number cited,” the company said in a statement early Friday in Frankfurt. “The negotiations are only just beginning. The bank expects that they will lead to an outcome similar to those of peer banks which have settled at materially lower amounts.”(source)
Deutsche Bank shares fell alarmingly this morning on the news that Merkel won’t support the bank.
Deutsche shares fell as much as six percent to €10.67 in early Monday trading, the worst performance since 1992.
The bank has lost over 52 percent of its value since January and over 56 percent in the last twelve months. Earnings per share fell as much as €6.
The collapse has been prompted by a report in the German magazine Focus that said Chancellor Angela Merkel has ruled out any state assistance for the bank next year.
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