admin Deutsche Bank, the largest lender in Germany, saw its shares tumble amid growing concerns over the global financial system. The bank’s stocks experienced their third consecutive day of losses, dropping by as much as 15 percent before making a slight recovery and ultimately closing down by 8.5 percent.
It provides basic services such as lending, managing money, and corporate accounts for multinational companies. As a result, its struggles have implications for the broader financial system.
Despite years of efforts to make the bank smaller and safer, Deutsche Bank remains globally important and holds a significant footprint on Wall Street trading bonds, derivatives, and currencies.
Deutsche Bank’s woes come in the context of investors searching for vulnerable institutions after the collapse of Silicon Valley Bank (SVB) earlier this month. The collapse of the institution, which few had on their radar screens, served as a reminder of how quickly confidence can erode in banks.
Regulators require banks to raise AT1 funds to protect themselves from losses. This provision has sparked concerns over the potential for contagion throughout the European banking system. The move could make investors hesitant to buy these bonds from other banks, increasing borrowing costs and further destabilising the already fragile banking sector.
Magazine
