Deutsche Bankthe largest bank in Germany ($20.51B in market capitalization as of March 2023), it appears to be next in the spotlight, after the recent banking turmoil. The bank’s shares suffered from heavy selling for three consecutive weeks, last closing at 8.5260 eurosretracing to new lows since October 2022. In this month alone, as of last Friday’s close, Deutsche Bank’s share price has fallen almost 40%lose 1/5 of its market value.
Concerns about the stability of the banking sector were the main factor driving the sell-off. Although policy makers took immediate rescue measures and Giving reassurances That the banking system remains “sound and resilient”, this clearly did not convince investors. The impact was widespread, with major European banks falling -5.1% Overnight, British banks fell further -3%, Most of the major US banks declined (with the exception of Bank of America which closed slightly higher +0.17% – (source: Yahoo Finance).
The European Central Bank (ECB) imposed a 50 basis point hike in interest rates in its latest decision, pushing borrowing costs to their highest level since late 2008. The latest a report is that Deutsche Bank’s five-year default swaps (CDS) (or the cost of insuring the bond against default risk) have jumped to more than four-year highs, exceeding 220 basis points. that it AT1 bonds It also sold sharply, with the two-week bond yield doubling to more than 22%.
Deutsche Bank issued a statement It will redeem its Level II notes to the fixed and fixed reset rate due in 2028, valued at $1.5 billion, on the 24th.y May, subject to the principal amount and from (but not including) redemption of 100% of the interest due on the day of redemption. All necessary regulatory approvals have been received, and formal redemption notices will be delivered in accordance with the undertaking terms of the Clarifications. Such a move could exacerbate market concerns about a weakening of the bank’s capital.
However, some economists and analysts have pointed this out Deutsche Bank will not be the next Credit Suissesupported by a reorganized and modern business model, strong fundamentals and profitability over the years, and a good solvency or liquidity position, the level of delinquent debt swaps remains well below that of CS (which peaked above 1,000 basis points).
The #DeutscheBank (DB.sThe share price has been trending lower after rebounding from the year-to-date high in late January at 12.36 euros. The accumulated losses from the said peak were present 45%. 8.92 euros (or 61.8% of France extended from the lows of April 2020 to the highs of February 2022) acting as the nearest resistance. As long as the asset remains under pressure below this level, the selling pressure may continue, bringing support 7.37 euros (FR 78.6%) in focus, followed by 6.30 euros And 5.39 euros. Otherwise, if the price closes above 8.92 eurosthe bulls may continue to test 10 euros (0.0% FR) and the 100-week simple moving average, both of which act as crucial resistance.
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Larence Chang
Market analyst
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