Deutsche Bank’s biggest headache from the coronavirus downturn is likely to come from difficulties offloading problem assets from the last financial crisis rather than bad loans piling up in the latest one.
The German bank, still considered by regulators to be one of world’s the most important in terms of financial market stability, is trying to recover after five consecutive years of losses totalling more than 15 billion euros (13 billion pounds).
Crucial to the bank’s recovery is its efforts to shed 44 billion euros worth of complex assets held in a so-called “capital release unit” or “bad bank” that have plagued its balance sheet for years.
But the coronavirus crisis is gumming up the market for the types of exotic derivatives Deutsche Bank is trying to sell, which means the biggest threat to the lender’s capital levels is likely to come from its bad bank, analysts, derivatives experts and sources within the bank said.
Last year, Chief Executive Christian Sewing unveiled a plan to return the bank to profitability, shrinking its investment bank and axing 18,000 jobs globally, but the virus now threatens to delay his ability to execute it.
The bad bank is central to Sewing’s plan, enabling Deutsche Bank to shed unwanted assets such as risky and illiquid derivatives and delinquent loans that have been a drain on its balance sheet for years and free up capital to support its core businesses.
Deutsche said its plan to offload most of the assets within the bad bank by 2022 was on track.
The bank said it “continues to see active participation in its disposal programme” in the second quarter.
“Thus far we do not see the current market conditions as a major impediment to our plans,” it said in an emailed statement.
The Insight Partners is a one stop industry research provider of actionable intelligence. We help our clients in getting solutions to their research requirements through our syndicated and consulting research services. We specialize in industries such as Semiconductor and Electronics, Aerospace and Defense, Automotive and Transportation, Biotechnology, Healthcare IT, Manufacturing and Construction, Medical Device, Technology, Media and Telecommunications, Chemicals and Materials.
Severity: Warning
Message: count(): Parameter must be an array or an object that implements Countable
Filename: amp/news_details_amp.php
Line Number: 252
Backtrace:
File: /home/smartmarketnews/public_html/application/views/amp/news_details_amp.php
Line: 252
Function: _error_handler
File: /home/smartmarketnews/public_html/application/controllers/Amp_controller.php
Line: 41
Function: view
File: /home/smartmarketnews/public_html/index.php
Line: 315
Function: require_once
Smarter Decisions with Smart News
Smart Market News is committed to getting its readers the latest updates and insights on industries that help in making “smarter” business decisions. With insights and inputs from corporate decision makers, we bring you the stories of adopting innovative solutions and strategies that have been changing the world. Our editorial insights on products, solutions, companies, and adoption of best practices not only help in understanding the markets better, but also prove to be a complete package for your information needs.
media@smartmarketnews.com | sales@smartmarketnews.com
Contact Us