From Dan Denning – Southbank Private Briefing (Great Britain) –
You can’t go past Deutsche Bank (DB) as the big story this week. There are better things to do than worry about an imminent collapse at DB, says Charlie Morris in this week’s The Fleet Street Letter. But what if this week’s trouble is the sign of a broader systemic problem in the global banking sector? More to the point, is it possible that DB is the “next Lehman Brothers” that sends the world’s financial system into another tailspin?
When the adrenaline gets pumping and you’re reading headlines, it can feel a lot like the latter scenario. The 57% fall in DB’s shares year-to-date are certainly telling you there’s a problem at the bank. But what, precisely, is the problem. Take your pick!
It could be the bank’s gross derivatives exposure of €42 trillion. It could be the fact that the bank is deemed by the IMF to be a global systemically important bank. Or it could be plain old concerns about liquidity and asset quality; the same kind of concerns that eventually dragged Lehman down.