Centrum Stosunków Międzynarodowych - 18 October 2016: Deutsche Bank AG, Germany’s largest lender is struggling

Germany`s largest bank, Deutsche Bank, is facing a crisis. After a series of scandals and bad mistakes, some weeks ago, US regulators announced that they seek to fine Deutsch Bank AG $14 billion. This sum is enough to fundamentally threaten the viability of the bank. Now rumors about rescue plans of the federal government and the German industry for the by far largest German money house are making the round. Currently, the bank does not have liquidity nor solvency problems and there are no plans for a capital increase.

Even if the US Department of Justice settlement might be lower than $14 billion, the bank might still need to face other charges between $8 and $9.5 billion, according to some analysts. Currently, the bank is facing the historically biggest decline of the interest rate and the share price has fallen by 90 percent since its peak ten years ago. This means that the shareholders will no longer receive a dividend. In the meantime, even serious observers no longer consider it completely impossible for Deutsche Bank to collapse. If the bank would go bankrupt, then this would have an even bigger impact than the bankruptcy of the Lehman Bank in the USA due to its “system relevancy”. The state would be very likely to bail out the bank.