* Large U.S. banks are rapidly gaining share in fixed income trading and retail and corporate lending
Deutsche Bank’s shares hit another new low overnight.
As I have written in the past, I view (DB) as the next Black Swan in Europe:
“Like Sears (SHLD) , Deutsche Bank has no current profits, is in a state or operating flux, is being forced to sell assets, has an extremely low equity capitalization and a large and leveraged balance sheet.
Consider that DB’s equity cap is only about $23 billion, compared to $170 billion for Citigroup (C) – even though both have a comparable amount of assets on their balance sheet ($1.75 trillion).
Deutsche Bank generates less than $50 billion in revenues (which is moving lower as it jettisons losing or capital intensive operating assets) compared to $65 billion for C.
By contrast, JP Morgan (JPM) has $2.5 trillion in assets, $200 billion of equity and generates almost $100 billion of revenues.
Reflecting operating losses and a toxic asset book (of European loans and sovereign debt), DB trades at only one third of (overstated) shareholders equity compared to Citigroup at 90% of shareholders equity and JP Morgan at 1.8x capital.
If all this wasn’t enough, Deutsche Bank has an opaque derivatives book – probably at about $40 trillion with an estimated net exposure of approximately $100 billion.