Spent some time looking at DB’s reports / presentation. To understand DB’s problem you need to look back at Lehman. Here is Lehman’s last report (www.sec.gov/Archives/edgar/data/806085/000110465908045115/a08-18147_110q.htm) – if you look at assets / liabilities – their total assets were 639,432 million and total equity was 26,276. In essence levered 24:1. This high leverage means that if just if just 4% of loans goes bad, the bank is wiped out.
DB has a similar problem. DB’s assets are 1.43T euros vs equity of 62.9B euros – levered 22:1. DB has book value of 25 euros per share, yet it 6.9 euro per share. Thats because it is likely they will have lots of losses while unwinding the balance sheet like they are doing now.
Deutsche Bank mass-firings first domino in global downturn?
Deutsche Bank has announced plans to lay off 18,000 employees over the next three years, along with other changes to its business model. Economist and founder of Democracy at Work Prof. Richard Wolff joins Rick Sanchez to share his insights. He argues that Deutsche Bank’s announcement of the layoffs three years in advance may have been a mistake.