Here’s what is said and not said in Germany about Deutsche Bank
Black Friday on the stock exchange for Deutsche Bank does not get much coverage in the German media, but financial analysts in Germany are not too relaxed. Here because. The article by Pierluigi Mennitti from Berlin
The wave of sales that hit Deutsche Bank on Black Friday of the German stock exchange (not only) occupies a lot of space on the front pages of the weekend newspapers, but not the main one, contested by two topics that steal the show in Germany. A political one: the scheduled Sunday government summit, an unusual day, to try to resolve the too many issues that divide the ministers and the majority parties and find a common line for the continuation of the legislature. The other socio-economic, with the great (almost) general strike of public transport, destined to paralyze the country's air and rail traffic and a good part of the city's urban mobility on the first day of the new week. Finding a departing train on the tracks or trying to get to one of the airports spared from the strike next Monday is a higher concern for the ordinary citizen than the collapse of bank shares.
Thus the banking crisis and the repercussions on German institutions, and Deutsche Bank in particular, deserve second-row attention, reserved above all in the financial pages of newspapers, online news and television news.
For the Frankfurter Allgemeine Zeitung ( Faz ), Olaf Scholz's statements (“there is no cause for concern”) did not serve to reassure anyone and had no effect (they appeared as “a whistle in the forest” is the way of literal German used by the newspaper).
“At the end of a very turbulent week on the financial markets, Deutsche Bank has once again come under the spotlight”, writes Inke Schönauer, head of the financial editorial staff of the Frankfurt daily, in the editorial, “even if it apparently has nothing to do with the banking earthquake in the United States or with the forced marriage of the two big banks Credit Suisse and UBS”.
The problem is that the German institute pays for its own weaknesses: it is its past that puts it in difficulty. After all, it has repeatedly attracted attention for its behavior during the crises of recent years, resumes the Faz , a newspaper which is based in the German financial center and where Deutsche Bank is also at home. It is true that the current board has reversed the trend of a disastrous corporate culture, “but the crises continue to have an effect and Deutsche Bank is also being punished as representing the whole banking sector, closely linked to interest rate risks ”.
Banks have long begged central banks to finally raise interest rates after so many years of “drought,” Schönauer observes, and this is what is happening now: “But the speed of rate hikes is high and can seriously undermine the equilibrium of the banking activity”.
Frankfurter notes that investors are also nervous about news of a weakening commercial real estate market in the US, and Deutsche Bank is very active in this area. Meanwhile, the German institute has the task of demonstrating the real stability of its business foundations.
As for the political side, Faz concludes with a look at the highest level: "Chancellor Olaf Scholz declared at the European summit that the bank's business model has been reorganized, fundamentally modernized and is very profitable, but the proof of the duration of these claims is still pending."
The Süddeutsche Zeitung emphasizes the moment of the rescue of the Swiss Credit Suisse. He talks about a moment like those that divide life (in this case economic) into two parts, a before and an after, as has been said for some historical events that have marked turning points in our times: the fall of the wall of Berlin or the terrorist attack on the twin towers. “Nothing is in order”, the Bavarian newspaper entitles its commentary dedicated to the subject, betraying a certain nostalgia for an old tradition of German discipline that may have been lost, and continues: “After the emergency takeover of Credit Suisse, supervisory and politicians would like to go back to business as usual, as if nothing had happened, but the regulation of the banking sector is in complete chaos and a restart is urgently needed".
Süddeutsche reconstructs the turmoil of last Friday and searches for the causes. One possible reason: The costs of insolvency insurance have risen. If investors wanted to insure themselves against the default of a Deutsche Bank bond, they had to pay much more in recent days, the newspaper's analysis continued. To secure an investment of ten million euros, only around 140,000 euros were needed in the middle of the week, on Friday afternoon more than 200,000 were needed: “Many equity investors have probably also interpreted this as a sign of panic: there is something not do you go to Deutsche Bank?”.
With a round of opinions among banking analysts, the Monaco newspaper widens its gaze to what is happening. Stock experts assess Deutsche Bank's situation as stable, but with a weak strategy. In the private client area, the bank lags behind savings banks, Volksbanks and ING Bank and no longer plays a leading role in international business. Christian Sewing, the bank's CEO, only recently achieved his 8% return target because a special tax effect worked in his favor. “The fall in the share price is not a compliment to the bank's strategy,” stock expert Stefan Müller tells Süddeutsche , “however, one should not draw conclusions about Deutsche Bank's fundamentals from the fall in the share price”.
At the same time, the German institute is not considered a good role model for all stock market experts in terms of corporate strategy. “Deutsche Bank and Credit Suisse, unlike other large banks, have continued to do investment banking globally,” notes banking expert Dieter Hein of analyst firm Fairesearch, “and although Deutsche Bank managed to return to profitability as of 2020, financial markets are now asking who will be the next major weak bank to go into trouble after Credit Suisse”. And so the answer crosses the square in Frankfurt: "Deutsche Bank is at the forefront, because its business model is not considered profitable in a sustainable way", concludes Hein.
The need to explain (and also to reassure) emerges from the tone of the services of public television and radio stations. Thus the news of the Ard channel relies on an analysis by the financial experts of Autonomous Research: “We are relatively relaxed, given the bank's solid equity and liquidity positions. To be clear, Deutsche Bank is not the next Credit Suisse."
While the state radio Deutschlandfunk interviews the economist Veronika Grimm, who is also a member of the Council of economic experts of the German government (the famous 5 wise men), who focuses attention on the Swiss affair and its potential for global infection. "The crisis of the Swiss financial institution is rather homemade, the bank has been in crisis for months", said Grimm, who then underlined how "problems had already arisen in 2022". It is true that markets are currently unstable, Grimm continued, but unlike the great financial crisis of 2008, today's banks are better equipped with equity capital, better regulated and supervised by the ECB. “It becomes especially problematic when bad news or rumors lead many customers to close their accounts, thus depriving the bank of a lot of capital in a short time,” Grimm concluded, “and this is exactly what caused Credit Suisse to go bankrupt. ”.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/ecco-cosa-si-dice-e-non-si-dice-in-germania-su-deutsche-bank/ on Sat, 25 Mar 2023 11:08:36 +0000.