• 29 mins Unpacking Biden's $2 Trillion Green Energy Plan
  • 15 hours The Investment Sector Defying A Global Pandemic
  • 16 hours Face Masks Become The Key To Economic Recovery
  • 20 hours Impact Investing Remains Strong Despite COVID-19 Market Downturn
  • 22 hours Global Stocks Are Soaring On Fresh Vaccine Hopes
  • 1 day Rethinking Mining: A $10 Trillion Opportunity
  • 2 days Smart Investors Are Betting On This COVID-Proof Industry
  • 2 days Disney’s Digital Pivot Could Be Its Saving Grace
  • 2 days What Does Tesla's Million-Mile Battery Mean For Green Energy?
  • 2 days U.S.-China Tensions Are Reaching A Boiling Point
  • 2 days Gold Remains Strong Amid Increasing Economic Uncertainty
  • 3 days Morgan Stanley And Goldman Sachs Are Betting Big On This Budding Industry
  • 3 days Global Corporate Debt Soars To $9 Trillion
  • 3 days The Fed’s Slippery Slope
  • 3 days Precious Metals Pulled Ahead Of The Pack In The First Half Of 2020
  • 3 days Tesla Faces $20 Billion In Short Interest
  • 3 days China's Economic Recovery Remains Tepid
  • 3 days Silver Inches Closer To $20
  • 3 days The Secret Life Of Lithium
  • 4 days The Pandemic Proof $53 Billion Industry Wall Street Can’t Ignore
Is The Bull Market On Its Last Legs?

Is The Bull Market On Its Last Legs?

This aging bull market may…

How The Ultra-Wealthy Are Using Art To Dodge Taxes

How The Ultra-Wealthy Are Using Art To Dodge Taxes

More freeports open around the…

  1. Home
  2. Markets
  3. Other

Diving Into Deutsche Bank's 'Passion to Perform' Balance Sheet

Deutsche Bank shares have collapsed to lows deep under crisis lows and collapse of Lehman in the Great Financial Crisis. What's going on?

An investigation of Deutsche Bank's "Passion to Perform" balance sheet provides the clues.

Deutsche Bank Interim Report

The above clip from Deutsche Bank's First Quarter 2016 Statement.

Details in red from page 61 (PDF page 63) of the 126 page report.


Key Liabilities

  • €559 billion deposits
  • €562 billion negative derivatives
  • €151 billion long term debt


World's Most Systemically Dangerous Bank

Zero Hedge commented on the World's Most Systemically Dangerous Bank.

Here's the key chart.

Systemic Risk among GSIBs


Deutsche Bank Share Price

Deutsche Bank Monthly Chart 2001-2016


What Went Wrong?

Deutsche Bank's price to book value is 0.251.

Effectively the market suggests Deutsche Bank is worth 75% less than book value. Why?

  1. Is it derivatives?
  2. Are bank assets over-inflated?
  3. Other assets prices inflated?
  4. Liabilities understated?
  5. What about Brexit?

Brexit is the easiest explanation to throw out. Share prices started collapsing a second time starting at the beginning of 2014.

The bank has always been heavy in derivatives. Although recent activity may have led to losses or more scrutiny, it's relatively easily to discard that as the primary answer.


Banking Sector Malaise

Instead of pondering the obvious problems, what about other things?

  1. Targe2 imbalances starting to matter
  2. Italian banking woes starting to matter
  3. Rising chance that Eurosceptic leaders take control of Italy.
  4. What if Eurozone intrabank balances are in question?

My best guess is that Deutsche Bank share prices reflect all of the above but something in the second set of reasons, or something we still do not fully understand is the primary reason behind the collapse.


Related Articles

 

Back to homepage

Leave a comment

Leave a comment