Opinions Lorne Steinberg
Deutsche Bank AGDBCOMMENTNov 04, 2014
Stock price when the opinion was issued
As of Jun 05, 2026. Market Open.
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DB has fallen 94% since just before 2008 and on paper, this is a very similar pattern to CS. DB is down ~6% today and its Credit Default Swaps (CDS) have been moving substantially higher today, indicating that investors are paying up for insurance in the event that DB fails or defaults. At times, these events can become a self-fulfilling prophecy, and a material decline in its share price can lead to fewer funding options and a worse liquidity picture for the company. The Fed and other central banks around the world established open swap lines the other weekend so that in the event of depositors withdrawing funds from a foreign bank, that foreign bank can call upon the Fed and receive par for US Treasury Bills, even if they are well below par on the market. This was not established when CS failed, and we feel that this might help to alleviate any issues with DB.
Overall, as we've learned, these events can happen fast, and we're not ruling out the possibility of DB failing, but everyone, including the Fed and the US Treasury are keeping a closer eye on these possibilities and we think that higher level of scrutiny should help to quickly respond to any weaknesses in the bank.
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Chris Stuchberry
Like a lot of European banks, with the new capital requirements they had to do a very significant rights issue and had to raise a lot of capital. That is dilutive to shareholders. However it doesn't look expensive and he continues to look at this. They're going to suffer a little bit with the slowing European economies, but he could be talking about this on one of these shows someday.