Deutsche Bank AG (USA) peaked at $160 in May 2007. Since then, the stock has been falling down, down, down and down. Deutsche Bank is trading at $14,72 on Monday before the open, and the stock will plunge about 7% from start on Monday.
Deutsche Bank AG is a global investment bank, but as many similar European banks, they face a lot of challenges at the moment. The big challenge is not only low-interest rate, tougher regulation and changed consumer behavior. Now, they have a new life in the post-Brexit era.
This is not only a challenge for European banks as the industry on both sides of the Atlantic faces repercussions of Britons decision to leave the European Union. Deutsche Bank`s Chief Executive John Cryan said that he and his bank is well prepared for the post-Brexit era.
The bank faced a crisis as investors started to be sceptical about their contingent convertible (CoCo) bonds. Deutsche Bank decided to offer to buyback these bonds and told investors to calm down as they have liquidity to pay these bonds in the future.
Their cash equivalents were €22 billion in 1QFY15, and one year later they had a whopping €113 billion, which means that Deutsche Bank have cash enough to make new investments in the post-Brexit era.
Last year, they announced they will be cutting about 9,000 staff positions from global operations, were 4,000 are located in Germany. 2,500 cuts will be in its retail unit.
Deutsche Bank had enough capital to clear the Feds hypothetical downturn in 2015, but they didnt convince the Fed to approve the unit`s capital plan. Last year they had a lack of abilities in risk identification, revenue projections, and imposing proper internal controls.
The plunge in bank stocks continue in Europe on Monday. Barclays is down about 20% on Monday (12:45 UK time). They are all taking another serious beating post-Brexit, and the sector is getting battered on fears that fragile recoveries at many financial institutions will be delayed.
Italian banks are down 28% in two days. Are Italy considering a €40 billion capital infusion into its banks?
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