Deutsche Bank stakes skate following a rash spike in the cost to guarantee against its bankruptcy

March 27, 2023: On Friday, Deutsche Bank shares decreased following a spike in credit default swaps, as concerns regarding the stability of European banks persisted.

The Frankfurt-listed stock decreased 14% at one point during the session but trimmed losses to close 8.6% lower on Friday afternoon.

The German lender’s Frankfurt-listed shares retreated for a third consecutive day and have lost over a fifth of their value this month. Credit default is changing, a way of insurance for a firm’s bondholders against its default, leapt to 173 basis points Thursday night from 142 basis points the last day.

In the wake of the downfall of U.S.-based Silicon Valley Bank, UBS’s emergency rescue of Credit Suisse has triggered contagion concern among investors, which was deepened by the further monetary policy strictening by the U.S. Federal Reserve on Wednesday.

Swiss and international regulators and central banks hope that the brokering of Credit Suisse’s sale to its domestic competitor will help calm the markets.

Deutsche led broad refuses for major European banking stocks on Friday, with German rival Commerzbank which sheds 9%, while Credit Suisse, Societe Generale and UBS fell by more than 7%. Barclays and BNP Paribas both decreased by over 6%.

Deutsche Bank has reported ten straight quarters of profit following completing a multibillion-euro restructure that started in 2019 to reduce costs and develop profitability. The lender has stated an annual net income of 5 billion euros in the previous year, up 159% from the previous year.

Its CET1 ratio started at 13.4% at the end of 2022, its liquidity coverage ratio was 142%, and its net stable funding ratio was 119%. These figures would not indicate any cause for concern regarding the bank’s solvency or liquidity position.

On Friday, German Chancellor Olaf Scholz told a news conference in Brussels that Deutsche Bank had “thoroughly identified and modernized its firms model and is a very profitable bank,” stating that there is no basis for speculating about its future.

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Deutsche Bank stakes skate following a rash spike in the cost to guarantee against its bankruptcy
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Deutsche Bank stakes skate following a rash spike in the cost to guarantee against its bankruptcy
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The Women Leaders
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