Deutsche Bank is Germany’s largest lender and one of the world’s biggest financial players.
After trading at a loss of nearly 15 percent, the company’s share closed at a decline of nearly 8.5 percent on Friday.
It hasn’t even been a month since the collapse of Silicon Valley Bank in the United States and now another giant in the global banking sector has started to show signs of challenging times ahead. Deutsche Bank, Germany’s largest lender and one of the world’s biggest financial players witnessed a steep and steady fall in its shares on Friday. This bank’s stock showed a downward trajectory for the third day in a row on Friday, March 24.
After trading at a loss of nearly 15 percent, the company’s shares closed at a decline of nearly 8.5 percent. The bank’s shares have seen a decrease of 24 percent in prices in the last month itself and this has alerted investors across the world.
However, on Monday shares of Deutsche Bank AG recovered some losses as the analysts reassured that the German lender’s financial health was sound, according to a Bloomberg report. Shares of Germany’s largest bank closed 6.2% higher on Monday in Frankfurt, the best-performing stock on Europe’s Stoxx 600 Banks Index, the report added.
This isn’t Deutsche Bank’s first financial crisis. The bank was affected before the 2008 recession for a number of reasons when it tried going toe-to-toe with Wall Street investment banking giants back then. This led to the bank restructuring its business model and operations, leading to several job cuts and a Europe-centric approach for the most part. The restructuring worked in the bank’s favour and it clocked the highest annual profit ever in 2022, since 2007.
The past month hasn’t been good for the bank as the share prices have plummeted and it has witnessed sustained selling over three days until Friday. This led to credit-default swaps, which are used to protect against the bank’s default.
Deutsche Bank is considered to be one of the 30 lenders listed as Global-Systemically Important Banks (G-SIBs). The international rules suggest that such institutes need to hold higher levels of capital reserves and if they fail, it could lead to widespread losses.
Deutsche Bank’s dismal performance is a result of investors growing anxious after the recent fall of two huge American banks, the Silicon Valley Bank and Credit Suisse. As more and more people have unanswered questions, the German bank attempted to assuage investors regarding debt issues.
On March 24, the bank offered to redeem a separate type of subordinated bond which was originally due in 2028. It also offered to repurchase its bonds at a full 100 percent of their principal value along with any accrued interest to settle down the demands of the concerned investors.
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