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Friday, September 23, 2016

German Politicians Are Getting Nervous About Deutsche Bank

Just a few short days after Germany's premier financial publication Handelsblatt dared to utter the "n"-word, when it said that in the aftermath of last week's striking $14 billion DOJ settlement proposal, "some have even raised the possibility of a government bailout of Germany’s largest bank, which would be a defining event and a symbolic blow to the image of Europe’s largest economy", German lawmakers are finally starting to get nervous.
According to Bloomberg, Deutsche Bank’s suddenly troubling finances, impacted by the bank's low profitability courtesy of the ECB's NIRP policy as well as mounting legal costs courtesy of years of legal violations, "are raising concern among German politicians." At a closed session of Social Democratic finance lawmakers on Tuesday, Deutsche Bank’s woes came up alongside a debate over Basel financial rules. Participants discussed the U.S. fine and the financial reserves at Deutsche Bank’s disposal if it had to cover the full amount.
While the participants in the meeting did not reach any conclusions on the likely outcome, the discussion signals that the risks facing Deutsche Bank have the attention of Germany’s political establishment. Which means it's almost serious enough where the politicians, in the parlance of Jean-Claude Juncker, "have to lie" or in this case redirect attention, ideally abroad: the German Finance Ministry last week called on the U.S. to ensure a “fair outcome” for Deutsche Bank, citing cases against other banks where the government settled for reduced fines.

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