Crisis at Germany’s Deutsche Bank intensifies, ripples through to Commerzbank
Following a 7.5 percent plunge in its shares at the beginning of the week, the fragility of Deutsche Bank was again demonstrated yesterday when its shares fell a further 7 percent in afternoon trading on Wall Street, following a Bloomberg report that about 10 hedge funds were cutting their exposure to Germanys largest bank.
While the funds involved constitute only a small fraction of the more than 200 clients engaged in derivatives trading with the bank, it was enough to send its shares plummeting. Deutsche was forced to reissue a statement asserting that the vast majority of its clients have a full understanding of our stable financial position and the litigation process involving a $14 billion fine imposed on it by the US Department of Justice (DoJ) over its sub-prime mortgage dealings.
As Bloomberg noted, while the vast majority of clients had taken no action, the hedge funds move highlights concerns among some counterparties about doing business with Europes largest investment bank.
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As Deutsches financial woes deepened, Germanys second largest bank announced a drastic restructuring program on Thursday. Commerzbank will cut one in five jobs, a total of 9,600 positions.
Read more: https://www.wsws.org/en/articles/2016/09/30/bank-s30.html