Will Sovereign Wealth Capital Save Deutsche Bank?
Under intense fire for its last-twelve-month stock underperformance, Deutsche Bank AG is endlessly trying to placate shareholder concerns.
The German titan has been in discussions with its peers on a potential share sale – some estimates point to a €5 billion capital raise. The success and stability of Deutsche Bank are of tremendous concern for the financial health of Europe. The German lender was named as “the most important net contributor to systemic risks,” according to an International Monetary Fund (IMF) report from June 2016. The global report implies that Deutsche Bank is a threat to the global financial system. Why? Deutsche Bank has a gigantic derivatives portfolio of a notional value of €41.94 trillion, according to Deutsche Bank’s 2015 annual report. Approximately 78% of the bank’s derivative exposure is related to changes in interest rates. In 2011, Deutsche Bank peaked its derivative exposure at €59.195 trillion. Furthermore, according to Bank for International Settlements (BIS) data, the exposure of foreign banks to German counterparties by derivative contracts amounted to US$ 312.484 billion in the first quarter of 2016.
The question looms, does Qatar want more European bank exposure?
Who are Deutsche Bank’s Biggest Shareholders?
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