Opinions Lorne Steinberg
Deutsche Bank AGDBCOMMENTSep 07, 2017
Lorne SteinbergStock 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
This was one of his worst performing stocks a couple of years ago, but has been one of his best over the last 12 months. They decided to do an $8 billion-euro capital raise earlier this year, which he participated in. With that $8 billion euros, their ratios are way above where they have to be. They are now well capitalized and are in the midst of huge cost cutting. Selling for about half its tangible BV, and is compellingly cheap. Rising interest rates are a massive boost for this bank. They have great market shares in a lot of businesses. They are now once again well capitalized, and he is comfortable holding it. Doesn’t expect earnings to take off in the next couple of years. Hopes management does some of the things it says it is going to do and gets its businesses back to earning reasonable margins.