If Deutsche Bank collapses, it’s taking the euro with it

Saturday, February 13, 2016
By Paul Martin

Matthew Lynn
11 February 2016

The queues haven’t started forming outside branches in Frankfurt or Cologne yet. Even so, it is hard not to suspect that something is badly amiss at Deutsche Bank, Germany’s and indeed Europe’s mightiest financial institution, and the rock on which that economy is founded. The shares have been in freefall, and executives have been wheeled out to try and reassure everyone that all is well. For Deutsche to be in trouble is bad enough. But here’s the real problem. If Deutsche does go down, it is taking the euro down with it. Why? Because if Germany bails it out, the contrast with the punishment metered out to Greek banks will be too painful to contemplate. And yet, were it to be allowed to fail, it would be catastrophic for the German economy.

There is something nastily 2008 about the trading action in Deutsche. The shares have almost halved over the past month, falling from 21 euros to 13. They are down another 6 percent today. Earlier this week, its Yorkshire-born co-chief executive John Cryan took the unusual step of telling everyone the bank was ‘rock-solid’, while the German finance minister Wolfgang Schauble made a point of telling everyone he was not worried about Deutsche, which is bit like Roman Abramovich saying he totally backs whoever happens to be managing Chelsea this week.

The Rest…HERE

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