‘Europe
is SERIOUSLY ILL’ Deutsche Bank demands £133BILLION slush fund
from EU taxpayers
TROUBLED
Deutsche Bank has demanded the EU set aside a huge slush fund to save
the continent's financial system from collapse
27
October, 2016
The
news comes after British CEO John Cryan today warned of rapid
restructuring as the bank posted a two per cent profit amid its
weakening position.
According
to German media, David Folkerts-Landau, Deutsche Bank's Chief
Economist, said a €150bn (£133bn) pot of cash could be enough to
recapitalise the banks.
In
a bizarre interview Mr Folkerts-Landau said "Europe is seriously
ill" and demanded the EU look at bending new rules to avoid
disaster.
He
told Welt.de: "In Europe the programme does not have to be so
big.
"With
150 billion euros, the European banks can be recapitalised.
"Strictly
adhering to the rules would cause greater damage than suspending
them.
"Europe
is seriously ill and has to deal with the existing problems extremely
fast, otherwise a crash will be imminent."
The
news comes as Germany's largest lender set aside €1billion euros in
a litigation battle fund this morning as it gets set to face legal
action around the world after the International Monetary Fund slammed
it this summer.
The
bank said attention around negotiations concerning the DOJ settlement
had an 'unsettling effect.'
Analysts
say that Deutsche Bank's British CEO John Cryan has "inherited a
dogs' breakfast of a bank" as it appears the bank is making a
slush fund to counter lawsuits from angry investors.
The
firm is facing 7,000 class action suits from investors says Michael
Hewson of CMC Markets.
Deutsche
Bank is blaming the US department of justice following the
announcement it is to be fined for its troubles.
Failing
to recognise that there was a reason for the outcome of the
investigation the Chief Financial Officer tries to allay fears.
Deutsche
Bank CFO Marcus Schenck said: "The last two weeks in September,
post the unfortunate leak from the DOJ (Department of Justice),
caused a lot of speculation, which took its toll.
"That
continued for a week in October, but the situation has stabilised...
Prime Broking has certainly suffered.
"Developments
largely followed the same as liquidity reserves... but has since
stabilised."
The
bank has indicated that it could be March before it settles its fine
with the US department of Justice.
The
CEO Mr Cryan told investors: "We remain keen to settle this and
other open matters with US authorities. We must reduce litigation
overhand by settling those matters, remains top priority.
"We
need to restructure faster and higher intensity.
"The
macro economic outlook has worsened in Europe and the negative
interest rate outlook looks unlikely to change.
"We
are acutely aware of these changes.
"We
need to restructure and modernise the bank faster.
"We
are taking steps now on additional cost saving and taking measures
for better planning."
This is from Superstation95
GERMANY,
Italy, Switzerland, Britain and France are facing the catastrophic
consequences of ‘over leveraging’ as Europe's biggest banks
prepare to release their latest results over the next two days.
Analysts
say the potential for a cataclysmic failure could spread like a
wild-fire hitting the continent (Europe) and beyond as the true
extent of deep troubles in the international banking sector are
revealed.
The
IMF and German governments have refused to step in to prop-up
struggling banks but risk analysts are warning Deutsche Bank, RBS,
Lloyds, Unicredit, Intesa SanPaolo, and BMPS could all need a state
bail out.
And
it's going to be a wake up call for the whole of Europe say experts
who fear the reports are not going to be good for anyone.
With
alarming simliarities to the 2008 global financial crash, the latest
results could spell disaster not only for the wealthy bankers paid to
operate the system but for ordinary savers.
New
York based David Hendler of Viola Risk Advisors says the next two
days could have serious ramifications for the entire globe.
He
said:
"Like
autumn leaves falling from the mighty oaks, the incredible yellows,
oranges, and reds, will turn and rot into the ugly browns and black
detritus, leading to smelly and then crumbled leaves.
"Once
a mighty European bank, unfortunately, Deutsche Bank is going down
a“death-spiral” path and much of the big European banks are too,
whether due to their own transgression or sucked down into the ocean
depths by the biggest bank in Europe, Deutsche Bank.
"Compounded
by a crippled Italian banking system with no easy way out, and anemic
French banking and half-hearted British banking, these big European
region banks do not present any good merger saviours.
"Don't
look to the Swiss which are always insular and with Swiss banking
continuing in its fortress-like capital wall building mode cannot
handle troubled balance sheet banking target.
"Also,
with Swiss banks formerly old reliable asset management business
continuing to slow whether in China region or Europe and America,
they are revenues challenged.
"Spanish
banking, though experiencing sluggish revenues seems to be buoyed by
its lock on its domestic retail banking markets.
"But
don't look for the 'conquistador banks' for any mercy mergers
either."
Mr
Hendler who held a conference call with global investors yesterday is
preparing to publish a lengthy report tomorrow when the results begin
to become clear.
He
added: "For the most part, all of the above-mentioned German,
British, Italian banks either require a State government intervention
or they have already been intervened.
"SocGen
is the most dangerous French bank with huge systemic risk, ranking as
the third highest exposure at $72 billion according to the NYU V-Lab.
"More
troubling is that based on the European Banking Authority stress test
forecasts.
"For
the year 2017 it would take SocGen 11 years to rebuild its capital
from pre-tax pre-provision operating earnings.
"That
is just plain too long a capital rebuild period and speaks to the
company's dangerous systemic risk profile.
"Yet,
if the biggest bank in Europe is scrambling, this condition could
spread like a wild-fire and encircle much of European banking leading
to a possible state of contagion aka as a European regional banking
systemic liquidity crisis a point we made in early September."
EDITORIAL
NOTE
If
things are as bad as many European newspapers are reporting today,
this banking problem could COLLAPSE the EURO as a currency! Once the
EURO collapses, the U.S. Dollar will have only about two weeks of
life left to it, before it too, collapses.
What
this means is that anything YOU own which is denominated in "Dollars"
will face a disaster. This includes, stocks, bonds, and all the
accounts which hold stocks and bonds, like your IRA, 401-K and the
like.
It
is imperative that YOU have some "wealth preservation" in
the form of things which do not lose value: Gold, Silver, Real
Estate, etc. Further, if you choose to own Gold, Silver or other
precious metals, YOU MUST POSSESS THEM, do not merely buy "paper"
gold and "paper" silver which claims that the seller will
hold the physical metal for you. Those are scams; the holder of the
physical metal has sold the same ounce of Gold to over 500 other
people. That means if they all call and demand delivery, ONE person
gets the physical gold and everyone else gets . . . . bubkus.
This
article (above) isn't about MAKING money, this is about PRESERVING
money.
We
are entering a very serious time in Global finance and things do not
look well for the future. ALl of you remember what happened when
Lehman Brothers went belly-up in 2008. Well, Deutsche Bank goes
under, you need to understand that they are SEVEN TIMES LARGER than
Lehman Brothers was, and this time, no governments have any money
left to bail anyone out. If Deutsche Bank goes under, everything
else will follow - very quickly.
It
is important that we make clear that we are NOT licensed financial
advisers and we are NOT qualified to give financial advice. You
should consult with a licensed financial adviser before making any
financial decisions. Having said that, we can read the writing on
the wall as well as any other common person. The writing on the wall
spells FINANCIAL ARMAGEDDON and it may very well begin, Tomorrow -
Thursday, October
After
serving much drama to its shareholders - and global markets - over
the past couple of months, when its stock tumbled to all time lows
following the news of the bank's $14 billion DOJ settlement ask,
Deutsche Bank provided some relief when earlier this morning it
reported a modest, unexpected profit of €256 million for the third
quarter on lower litigation and restructuring costs, beating
consensus estimates of a €394 million loss, and a far better number
than the €6 billion loss reported one year ago. Revenues were also
a modest improvement to consensus expectations of €7.19BN, coming
in at €7.49BN as a result of a 14% jump in fixed income trading
revenues.
The
bank's closely watched core tier one capital ratio rose from 10.8% at
the end of June to 11.1% at the end of September, as Deutsche cut its
risk-weighted assets by €18bn to €385bn. CFO Marcus Schenck said
that the ratio would get a further boost of 40 to 50 basis points
once the sale of its stake in Chinese lender Hua Xia was completed.
CEO
John Cryan repeated that Deutsche was making “good progress” on
its restructuring, but admitted that results had been “overshadowed”
by its negotiations with the DOJ. “This had an unsettling effect.
The bank is working hard on achieving a resolution of this issue as
soon as possible."
The
failure to provide some additional guidance on the bank's settlement
process as well as on its recapitalization status is why the shares
have undone the entire 3% gap higher, and were trading fractionally
in the red. Raising a red flag, Deutsche Bank also said that it saw
€9BN in outflows from its new business for private, wealth and
commercial clients in the third quarter.
In
its Q3 interime report the bank revealed that it had suffered
reduction in business volumes as result of "negative
perceptions" concerning business and prospects amid talks tied
to RMBS settlement with the DoJ, and added that it saw business
reductions and asset outflows particularly in parts of global
markets, wealth management business.
In
a letter to employees, CEO Cryan said that Deutsche Bank's end-3Q
liquidity reserve was ~€200b, down €23 billion from a quarter
earlier, and said that the bank’s situation will remain tough for
some time. He also said that while talks with DOJ advancing, and it
was working to resolve matter as soon as possible, the environment
worsened in some important areas.
On
the conference call Cryan said that the bank needs to “restructure
and modernize the bank faster and with higher intensity,” and added
the following remarks:
“We
are taking steps now particularly to achieve additional cost savings
and RWA reductions”
“We
are also addressing the more challenging outlook in our planning to
ensure we achieve our financial goals”
“We
aim to be more ambitious in headcount reduction” and “give
preference to internal candidates”
Finally,
when looking at the results, Wall Street analysts said that that
while the positive surprise is a relief, it’s was also mostly
irrelevant because of potential impact from DOJ settlement.
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