Just a week after Qatar investors were ‘used’ as the headline ammunition for short squeeze momentum ignition in Deutsche Bank’s stock, WSJ reports the beleaguered bank’s biggest shareholder is getting worried, questioning management’s long-term strategy. The shares are slipping further as the German government rules out any state aid for the most dangeorus bank in the world.
Following yesterday’s dip, Deutsche stock is bid today but remains the same 12-12.50 range it has been in for a week… as credit markets remain near record wides…
Which perhaps helps explain Deutsche bank’s biggest shareholders’ concerns… (via The Wall Street Journal)…
The Qataris have reiterated their patience as long-term shareholders, with an interest in even eventually boosting their stake further, the people say.
But they don’t plan to do so immediately, some of the people said. First, the Qataris have said they want more clarity.
They are concerned about an erosion of profits and loss of talent in key businesses like investment banking and asset management, the people say. The asset-management business has had three leaders in the past 18 months, and managers have been in the position of reassuring both clients and employees of the bank’s commitment to it, people close to it say.
The Qataris have sought assurances that Deutsche Bank executives and its supervisory board are actively weighing all options, including a sale of the asset-management business, should legal fines or other factors press them to take more-dramatic steps than planned earlier.
Mr. Cryan has said asset management is an essential part of the bank.
The Qataris’ concerns increased after The Wall Street Journal reported Sept. 15 that the Justice Department suggested Deutsche Bank pay $14 billion to settle longstanding mortgage-securities cases, the people said. That opening bid from the U.S. government, which Deutsche Bank confirmed, is widely seen by investors and lawyers—and the bank itself—as much higher than what Deutsche Bank ultimately will end up paying.
Bankers and others who have spoken with existing and potential investors, or been briefed on discussions with them, say one concern is that most of Deutsche Bank’s management board lacks experience running the bank. Only one of its 11 members belonged to the board before January 2015. Five joined this year.
None of this is helped by the fact the German government has just come out and ruled out taking any stake in Deutsche Bank…
Aides to German Chancellor Angela Merkel have told lawmakers the state wouldn’t take a stake in Deutsche Bank AG if it were to issue new stock to shore up its thin capital cushion, one person who attended the briefing said.
The fact that Berlin appears to have ruled out any help for the embattled lender as both unnecessary and politically unfeasible could put Deutsche Bank under renewed pressure as it works to stabilize its share price and stay out of the news while negotiating an acceptable settlement in a U.S. misconduct investigation.
In a closed-door briefing with a small group of lawmakers last week, Chancellery aides and senior Finance Ministry officials said it was “inconceivable for the state to take a stake in Deutsche Bank,” said one person who declined to be named because the briefing was confidential.
“We have a different bank resolution system than in 2009 and this must apply to us in Germany too,” the government officials said according to this person. This referred to recent legal changes that now force European governments to bail-in creditors—and in some cases depositors—before they shore up a struggling bank with taxpayer money.
Still the fact that the credit and equity market remain so violently opposed here and the bank’s biggest shareholder is publicly noting its concern… is probably nothing.
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