Deutsche Bank, the second most prominent bank in Europe, the greatest bank in Germany, one of the ten largest banks by assets in the whole world and, evidently, the leading authority for derivatives trading, is caught up in a huge chaos. The International Monetary Fund was the first to warn about it being the biggest net contributor to systemic risks for the global financial system, undoubtedly, the bank’s situation is decisive for the world’s economy. The banking system simply cannot allow Deutsche Bank to fall, otherwise, it will drag along the whole financial system with it, creating a destructive domino effect that will result in a catastrophic economic collapse.
However, recent developments don’t seem favorable for its reputation. In fact, many now believe that the end is near for the bank, and its downfall may be closer than imagined. That’s why today, we decided to expose the many layers of Deutsche Bank’s inevitable decay and how its meltdown will likely resonate in our already severely disrupted economy. So stay with us, and please don’t forget to give this video a thumbs up, share it with friends, and subscribe to our channel to keep updated with future videos.
When it comes to banking issues a simple rule can be applied: The louder some authority shouts on the media reassuring everything is just fine, surely, the bigger the trouble really is. So when government officials are repeatedly insisting that nothing is going on and things will be handled smoothly, we have confirmation of their despair. Just by the fact that they bother to say anything at all, we can already ascertain that there’s something much more dangerous hiding behind the covers. And by the end of this video, you’ll understand that’s the case.
Deutsche Bank could be a contrarian’s dream. But it’s not because something is cheap – in exact numbers: down 84% – that it will necessarily be a good purchase. Falling share prices is a major red flag for a company, especially when the company is the institution that ties several other institutions together. It could be an alert sign for many looming problems, but the most visible one is that a stock market crash is right on the horizon.
So one can ask “what is going wrong with Deutsche Bank?” – and, well, basically everything. Starting with the foundations in which its system was created. For a while now, the bank is facing hardships to adapt to a changed competitive situation where its business model and cost structure are no longer sustainable. Needless to say that tightened regulations have made the banking industry a bureaucracy horror show.
Just as many bankrupt businesses trying to stay afloat, the German giant announced that it will lay off over 18,000 employees, which configures nearly one-fifth of its global workforce. The bank also disclosed to have plans to pursue a vast restructuring on its functioning, which will include shutting down its global equities trading business. Such measures may help to delay Deutsche Bank’s inexorable march into oblivion, but not for long. And when the weight becomes too heavy to bear, it will trigger a massive collapse taking down a whole lot of others with it at the same time.
The newsletter Wall Street On Parade noted that the bank has 49 trillion dollars in exposure to derivatives as of the end of last year, meaning it is in the same group as the U.S. titans JPMorgan Chase, Citigroup, and Goldman Sachs, which registered $48 trillion, $47 trillion and $42 trillion, respectively. And even though the bank’s actual credit risk is significantly lower than the national value of its derivatives contracts, there is still a scandalous amount of exposure that can be very well illustrated when we consider the state of Deutsche Bank’s balance sheet.
Furthermore, there are many other aggravating issues at stake for Deutsche Bank right now. According to the Financial Times, the German institution is coping with a shocking number of regulatory actions and lawsuits – 7,000 to be more precise. And you can imagine when such an important piece at the European’s shaky financial system is risking to fall and spark a disastrous domino effect, investor confidence can disappear from the charts in a matter of hours. Once it’s gone, there will be no way back other than a huge bailout. But considering the track record of the bank, it doesn’t seem like a feasible option, particularly because its situation will act as an explosive destroying everything in sight in the stock market.