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Weekly Debate Will Deutsche Bank Need Government Assistance?

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Editor’s Remarks:
Deutsche Bank’s fine from the US Justice Department is set at $14 bn. Last week they announced plans to raise up to €5bn from German corporations. Contrary to the views of The Breakfast Briefing readers, the IMF believes that Deutsche Bank will not need a bailout form the German government in the near future. In terms of assets, Deutsche is Germany’s largest bank, but the IMF recommended that they change, what they called a “dated business model”. In order to avoid a bailout Deutsche Bank needs to convince investors that their business model is going forward, which requires diversifying away from their large portfolio of assets. In order to reassure their shareholders, Deutsche bankers must prove that they are addressing the issues that may arise from their litigation. Aside from the enormous fine, Deutsche Bank is currently facing ultralow interest rates, modest capital buffers and weak growth. Deutsche Bank may posse the greatest threat to the world’s financial system, but a bailout would require the ECB to revisit the status of Italian bank Monte De Paschi, potentially costing european taxpayers significantly, at a time when support for the EU is fading.​

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