My Geneva fund contact: Deutsche Bank is officially on suicide watch. DB will be the next ‘Lehman’ moment that triggers new collapse..
Deutsche Bank Opaque Loans From Brazil to Italy Hide Risk
Deutsche Bank’s Accounting Raises Questions
….In other words, these ‘secured’ loans are not really secured, unless one considers what is effectively a short position on the bonds that were provided as collateral to represent adequate security. In addition, DB apparently ‘spiced’ the deals up by writing credit default swaps, exposing it to even more credit risk.
As Bloomberg further reports, this isn’t the first time DB has obscured its true financial position by means of accounting practices that are not necessarily illegal, but certainly raise questions about how to properly evaluate the risks the bank is exposed to.
Meanwhile, the banks that have received the loans in question were able to continue to report ownership of the bonds DB has sold, allowing them to misrepresent their own financial health as well…..
….
Banking insider: Deutsche Bank in danger zone and will go belly up
Deutsche Bank. Big bank. Biggest bank in Germany, and one of the biggest banks in the Euro Zone… they’re going to go belly up. Watch it. Watch it, I said it, it’s going to happen.
They are in such a danger zone, they don’t know what to do. Deutsche Bank’s derivative debt is greater than the global economy. That is one bank. $72 trillion in derivative exposure. The entire global economy, all the countries in the world is only $66 trillion GDP.
JIM WILLIE: BREAKDOWN SIGNALS: CONTAGION LOOMS!
WE’RE ALWAYS ON THE VERGE OF ANOTHER FINANCIAL CRISIS: 3 MAJOR BANKS ARE UNDER CONSTANT THREAT OF FAILURE OVERNIGHT, EVERY NIGHT
Meanwhile in bund land.......
German Bunds Battered Most In 5 Weeks As PMI Prompts Peripheral Bid
Portugal, Spain, and Italy all saw healthy high-beta gains in stocks and bonds today as the EU Composite PMI printing fractionally above 50 'proves' the crisis is over (just like it did in January 2012). Bunds suffered in this 'growth' rennaisance - underperforming Treasuries by 2bps and rising 9.5bps on the day. This is the worst day in Bunds in 5 weeks. Sell-side strategists couldn't get out of each other's way fast enough to proclaim the 'bottom is in'. Sadly, Greek stocks and bonds did not manage gains on the day as delays remain (even though D-Boom promised it will all be fine by July 29th).
Bunds Battered...
But bonds and stocks were well bid in risk-land...
Bonus Chart: It seems we quickly forget just how arbitrary these PMI data really is... In January 2012, EU PMI broke above 50 and the world breathed a sigh of relief that "the crisis was over" - turns out, it wasn't...
http://www.forexlive.com/blog/2013/06/14/deutsche-bank-in-trouble-as-capital-levels-horrible-says-us-banking-regulator/
FDIC vice chairman Thomas Hoenig has branded Deutsche banks capital levels as horrible in an interview with Reuters.
While the calculations run under the Basel III accord allow lenders to seem well capitalised, the FDIC has used a stricter calculation.
DB has obviously fought back by pointing to the rules from Basel III which they say makes them
In a further twist the FDIC has stressed that Hoenig was speaking in a personal capacity and that the agency did not comment on individual banks.
After all this time you wouldn’t think we would still be having arguments on how to keep track of banks books. The market has ignored this so late in the day but I can see this issue coming back into the lime light when the next round of stress tests are run.
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