Deutshe Bank

Just long term damage to the brand. Poor pricing, low returns, capital at risk. European bank stocks are dogs

I'm still not sure how the share price imperils the company.

The net tangible asset value per share in the H2 accounts was over €37. The market is currently valuing the goodwill at minus €27 per share. Even if you take the whole $14bn fine off the balance sheet, the net tangible asset value is €27. I don't know what long term brand damage you are expecting, but it is already more than priced in.

As for returns, you can currently buy between €27 and €37 for €10. So multiply the expected return on capital by between 2.7 and 3.7 and see if you like it.

As for capital being at risk, the lower the price the lower the risk for a buyer. Unless the company goes bust (which has nothing to do with the share price).

"Dogs" - what, at any price?
 


The Swabian housewife had better get her finger out and bail them out because the longer they leave it the worse it'll be. She's wanting to get reelected but she's going to have to bite the bullet and get on with it.

The good news is that it means southern European countries can then bail their banks out. The bad news is they're just treating the symptoms and not the problem. By and large the banks are in trouble because they've got so many non performing loans. They've got so many non performing loans because of non performing economies. While they're stuck with the euro and attempts to balance budgets the banks are only going to pile up more bad loans.
 
I'm still not sure how the share price imperils the company.

The net tangible asset value per share in the H2 accounts was over €37. The market is currently valuing the goodwill at minus €27 per share. Even if you take the whole $14bn fine off the balance sheet, the net tangible asset value is €27. I don't know what long term brand damage you are expecting, but it is already more than priced in.

As for returns, you can currently buy between €27 and €37 for €10. So multiply the expected return on capital by between 2.7 and 3.7 and see if you like it.

As for capital being at risk, the lower the price the lower the risk for a buyer. Unless the company goes bust (which has nothing to do with the share price).

"Dogs" - what, at any price?
Hi sorry. So dB are stuck in a horrible situation in that negative interest rates are killing the profit model of banks. Add on to that the non performing loan book, legacy otc derivatives that don't have enough margin, liabilities for penalties set aside and the fact that people are doing less business with them probably makes them a poor investment. They are unlikely to be paying divs so no annuity and the longer this shot drags out damages the brand.

We've pulled business from them in the last 48h.

Nav is only good if you believe the a from the accountants. and that the bank is resilient to a run.

I wouldn't buy or sell. Too binary.
 
Hi sorry. So dB are stuck in a horrible situation in that negative interest rates are killing the profit model of banks. Add on to that the non performing loan book, legacy otc derivatives that don't have enough margin, liabilities for penalties set aside and the fact that people are doing less business with them probably makes them a poor investment. They are unlikely to be paying divs so no annuity and the longer this shot drags out damages the brand.

We've pulled business from them in the last 48h.

Nav is only good if you believe the a from the accountants. and that the bank is resilient to a run.

I wouldn't buy or sell. Too binary.

how can any bank be resilient to a run?
 
what is tier1 equity? surely if all investors and customers do a runner the whole business model is fucked.......

Shareholder capital (cash invested in exchange for shares) and Retained Earnings (profits that haven't been paid out in dividends).

If all customers withdraw their cash you're fucked, not everyone will obviously but banks with more customer deposits (in relative terms) are more at risk.
 
Shareholder capital (cash invested in exchange for shares) and Retained Earnings (profits that haven't been paid out in dividends).

If all customers withdraw their cash you're fucked, not everyone will obviously but banks with more customer deposits (in relative terms) are more at risk.

I see, thanks for the explanation. Is there a tier2, tier3 etc. also?
 
how can any bank be resilient to a run?
Iirc it mentioned that do have pretty big liquidity (240bn euros approx) of cash and easy to dispose of assets, so are fine in the short them.
They work it out on something like cash and assets divided by estimated potential withdrawals in a 30 day period
Also just got shot of abbey life and some Chinese bank as well haven't they?
 
Iirc it mentioned that do have pretty big liquidity (240bn euros approx) of cash and easy to dispose of assets, so are fine in the short them.
They work it out on something like cash and assets divided by estimated potential withdrawals in a 30 day period
Also just got shot of abbey life and some Chinese bank as well haven't they?

That liquidity is misleading. If they had 240 billion of ready cash and a market cap of 16 billion someone would snap them up, shut them down and make a killing
 
That liquidity is misleading. If they had 240 billion of ready cash and a market cap of 16 billion someone would snap them up, shut them down and make a killing
It's not ready cash to use willy nilly it's cash and easily convertible assets to cover withdrawls. It's not like a slush fund the bank actually owns it's investors money

I suppose the fear is if there's a mad dash from hedge funds trying to withdraw huge tranches to move....also wasn't there a rumour the USA were going to settle at about 5.5bn fine instead of the 14bn being muted. Wouldn't look good the USA f***ing a euro bank over and potentially sending it spiralling then the ripple effects reach everyone
 
It's not ready cash to use willy nilly it's cash and easily convertible assets to cover withdrawls. It's not like a slush fund the bank actually owns it's investors money

I suppose the fear is if there's a mad dash from hedge funds trying to withdraw huge tranches to move....also wasn't there a rumour the USA were going to settle at about 5.5bn fine instead of the 14bn being muted. Wouldn't look good the USA f***ing a euro bank over and potentially sending it spiralling then the ripple effects reach everyone

On the contrary the DOJ would be going incredibly lightly on DB if they get off with 5.5 billion.

The general view is that DB was one of the most culpable of banks for the mortgage crisis. The other big 2 that played a big part BOA and JP Morgan have got 16.65 and 13 billion respectively.

Even Citibank who had less responsibility got 7 billion.

See where you are coming from but the original fine was based objectively on the degree of culpability and was in line with what US banks who played an equally bad role got.

If they roll over and give DB less they will have been a lot more lenient then they were on their own banks
 
EU/Germany really are in a bad way, which will undoubtedly reverberate globally, I'm just glad we're no longer on the front line
 
On the contrary the DOJ would be going incredibly lightly on DB if they get off with 5.5 billion.

The general view is that DB was one of the most culpable of banks for the mortgage crisis. The other big 2 that played a big part BOA and JP Morgan have got 16.65 and 13 billion respectively.

Even Citibank who had less responsibility got 7 billion.

See where you are coming from but the original fine was based objectively on the degree of culpability and was in line with what US banks who played an equally bad role got.

If they roll over and give DB less they will have been a lot more lenient then they were on their own banks
At the time there was a much bigger lust for blood to get the 'bankers' I'm not sure what purpose it would serve destabilising and possibly sending over the edge a bank the size of db now. And 5.5bn is still a whacking amount of money
I know it's wrong and all that if they did indeed do as much, if not worse than some in the past, but does any country have the appetite to go through the 2008 shit again, and if the yanks did really stick it to them, want are the potential exposures to American investors and investments?
 
On the contrary the DOJ would be going incredibly lightly on DB if they get off with 5.5 billion.

The general view is that DB was one of the most culpable of banks for the mortgage crisis. The other big 2 that played a big part BOA and JP Morgan have got 16.65 and 13 billion respectively.

Even Citibank who had less responsibility got 7 billion.

See where you are coming from but the original fine was based objectively on the degree of culpability and was in line with what US banks who played an equally bad role got.

If they roll over and give DB less they will have been a lot more lenient then they were on their own banks

its to do with EU/Germany action against Apple et al
 
its to do with EU/Germany action against Apple et al

It's really not. This started well before that and is based objectively on DB''s role in the original sub prime crisis in the US where it started.

The DOJ set a fine for them proportinate and equitable with what equally culiable US banks got
 

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