Shares of Deutsche Bank fall
As the latest effect of the global banking crisis, the share price of Deutsche Bank AG collapsed by up to 15 percent on Friday. After the recent collapse of Switzerland’s Credit Suisse, investors have become more suspicious of traditional banks. In addition, major banks in the US have already collapsed, two of them, Signature Bank and Silicon Valley Bank , as victims of bank runs.
Deutsche Bank shares traded around $8 on Friday, down two percentage points over the past 24 hours, according to market data from MarketWatch. As a result, Deutsche Bank shares have fallen about 26 percent over the past month. The German banking giant has a market capitalization of around 19 billion euros and 2 billion euros in share capital.
Deutsche Bank and the market outlook
The bank has caught the eye of investors due to rising inflation and high demand for digital banking. According to data from S&P Market Intelligence, Deutsche Bank’s credit default swaps (CDS) – a form of insurance for bondholders – have risen above 220 basis points, the highest since late 2018, from 142 basis points two days ago had. However, credit default swaps (CDS) rose sharply for all European banks.
Nevertheless, Federal Chancellor Olaf Scholz assured:
“Deutsche Bank has fundamentally modernized and reorganized its business model and is a very profitable bank.”
He must know. After all, this is how he made his experiences with banks, even if not in Frankfurt but in Hamburg, where he is fondly remembered in certain banking circles.
Deutsche Bank had not officially commented on the sudden price drop as of Friday, but announced that it would repurchase $1.5 billion of Tier 2 fixed-rate subordinated notes due 2028. Stuart Cole, senior macroeconomist at Equiti Capital said:.
“Deutsche Bank has been in the spotlight for some time now, much like Credit Suisse. It has undergone various reorganizations and management changes to put it back on a solid footing, but so far none of these efforts appear to have really been successful.”
Another victory for Bitcoin
With every failure of traditional financial institutions, investors are realizing the importance of Bitcoin in the fight against rising global inflation. Additionally, bitcoin price is up about 70 percent year-on-year to trade at $28,000 on Friday.