[Revi]

Here's a letter to reassure employees of Deutsche Bank a couple of days ago:
https://www.db.com/newsroom_news/2016/ghp/a-message-from-john-cryan-to-deutsche-bank-employees-0902-en-11392.htm

Here's Zero Hedge's take on it:

http://www.zerohedge.com/news/2016-02-1 ... ecord-high

[Revi]

Here's a word from the chairman of Deutsche Bank to his employees:

"You can tell them that Deutsche Bank remains absolutely rock-solid, given our strong capital and risk position."

See, it's all fine now.

[EdwinSm]

Why banks are being hit now? A report that links things back to the last crash and the attempt to make bond holders pay for any future crash....

.....
New rules mean that, when disaster beckons again, some lenders to the banks would see their bonds (in effect IOUs) turn into shares. In other words, they may not get their money back in full, or on time. These new IOUs are called Cocos - short for contingent convertible bonds.

In short, they are not getting the security lenders usually get.

The removal of this implied government guarantee has made the value of those IOUs fall and threatens banks' ability to sell more in the future. That makes banks less stable and, hey presto, here we are with some bank shares down 40% since the beginning of the year.

Like it or not, banks still operate as the bloodstream of the financial system. When the arteries of funding get blocked - you risk cardiac arrest. ....

http://www.bbc.com/news/business-35541694

[vox_mundi]

Here's a word from the chairman of Deutsche Bank to his employees:

"You can tell them that Deutsche Bank remains absolutely rock-solid, given our strong capital and risk position."

See, it's all fine now.

Right out of the Enron Playbook ...

In an Aug. 21 letter, Enron CEO Mr. Lay sought to reassure Enron employees that the company was on solid footing, writing, ''One of my highest priorities is to restore investor confidence in Enron. This should result in a significantly higher stock price.'' At the time, Enron shares were trading at almost $37. By late November, it was trading as low as 30 cents a share.

In an all-employee meeting to reassure Enron's employees, Lay falsely described Enron's liquidity, stating that "[o]ur liquidity is fine. As a matter of fact, it's better than fine, it's strong. . ."

At the time he made the statement, Lay knew that Enron had been forced to offer its prized pipelines as collateral for a $1 billion bank loan and that the only source of liquidity was a $3 billion line of credit, which was fully utilized on Lay's authority.

Lay made a series of false and misleading statements during an Enron employee online forum, including that "[t]he third quarter is looking great. We will hit our numbers. We are continuing to have strong growth in our businesses," "we have record operating and financial results," and "the balance sheet is strong."

[Plantagenet]

At least we're OK here in the US. The unemployment just dropped below 5% so we're at full employment, and according to the government the US economy is doing great. As Obama said just a few weeks ago:

OBAMA: Anyone claiming that America's economy is in decline is peddling fiction.

Cheers!

[Revi]

I think the Deutsche Bank fiasco is what dragged markets down this morning. It seems like around 2:30 they did something to pull it back up again.

[Revi]

And it's not just Deutsche Bank! Credit Suisse is having problems as well:

http://www.zerohedge.com/news/2016-02-1 ... tsche-bank

[Revi]

At least we're OK here in the US. The unemployment just dropped below 5% so we're at full employment, and according to the government the US economy is doing great. As Obama said just a few weeks ago:

OBAMA: Anyone claiming that America's economy is in decline is peddling fiction.

Cheers!

So glad everything is fine!

What do you think this Deutsche Bank tanking will mean to the US? The US Dollar index seems to be going down, so the dollar is getting weaker lately. Will it go back up if Europe has troubles?

[EdwinSm]

They are doing something to say they are OK. I don't know enough about the ins and outs of this to say if it is a good move or an act of desperation or not, but the share price has risen

Deutsche Bank has announced that it is to buy back more than $5bn (£3.5bn) of its own debt.

It is buying €3bn (£2.3bn) of euro-denominated bonds and $2bn of dollar-denominated ones.

Rumours on Wednesday that it was about to buy the debt sent Deutsche Bank's shares soaring.

The confirmation on Friday gave the shares a bit of a boost, although they had already been up by about 10% earlier in the day.

Deutsche Bank said that it had the resources to make the purchases without changing its funding plans.

"The bank's strong liquidity position allows it to repurchase these securities without any corresponding change to its 2016 funding plan," it said.

The buyback has been taken as a signal of the bank's robustness.
....

http://www.bbc.com/news/business-35559735

[tlowellb]

Where does the money come from for the bank to buy back the debt?

[Rod_Cloutier]

Where does the money come from for the bank to buy back the debt?

There are multiple possibilities. The bank could borrow the money, either by issuing new stock, or issuing corporate paper.

The could get the government to pay for it, by altering reserve requirement, bailouts, ect.

The bank could use retained earnings, ie profits will be used to pay debt rather than given as proceeds to shareholders

The bank could do a bail in deal, where they take depositor monies to rescue them.

They likely will try the first three first before trying bail ins.

[peripato]

At least we're OK here in the US. The unemployment just dropped below 5% so we're at full employment, and according to the government the US economy is doing great. As Obama said just a few weeks ago:

OBAMA: Anyone claiming that America's economy is in decline is peddling fiction.

Cheers!

[EdwinSm]

UK & EU Bank Bonds fail to sell

In itself this may not be too much of a problem, but it does weaken the banks' positions so may be one factor in a possible bank crisis. I am not expecting any immediate problem, but this seems to indicate that things might be building up to some problem later (unspecified time prediction - as I do not know enough to really give any predictions regarding the health of the banking industry).

UK and European banks have failed to sell any so-called Coco bonds this year amid worries about the health of the banking sector.

Cocos - short for contingent convertible bonds - are turned into shares if a bank starts to struggle.....

Banks had planned to issue €40bn of Coco bonds this year, according to Dealogic.

That leaves them facing a financing gap at a time when analysts are warning that Europe's banks must also deal with rising costs and slowing revenue....

http://www.bbc.com/news/business-35625733

[Revi]

Will they have trouble without the Co Co bonds? It seems like they have papered over the Deutsche Bank crisis for now, but will it re-emerge?

[vox_mundi]

Wall Street falls sharply on worries about banks

Wall Street dropped on Thursday, weighed down by Apple as well as selling in Wells Fargo, Citigroup and other major banks as investors worried about the health of Deutsche Bank.

The S&P 500 financial index declined 1.49 percent after Bloomberg reported that some hedge funds have withdrawn excess cash and positions held at the German lender.

Growing concerns over the stability of Germany's biggest bank have pushed its shares to record lows and its U.S.-listed stock on Thursday tumbled 6.7 percent.

"This Deutsche Bank story is really casting a very long shadow over equity markets," said Peter Kenny, senior market strategist at Global Markets Advisory Group, in New York. "In some respects, it speaks to fears over large money-center banks having serious problems, and the last time we had that conversation was the financial crisis."

Adding to negative sentiment in the banking sector, Wells Fargo & Co lost 2.07 percent after U.S. lawmakers rebuked CEO John Stumpf over his handling of sales abuses.

Citigroup dropped 2.28 percent and JPMorgan Chase fell 1.59 percent.

The CBOE Volatility Index, a gauge of near-term investor anxiety, jumped 14 percent.

Traders bid up traditional quality assets including Treasuries, gold and the yen after a Bloomberg News report said some funds that clear derivatives trades with Deutsche Bank had withdrawn some excess cash and positions held at the bank. Investors fled financial securities amid concern the Frankfurt-based bank’s woes could spread to counterparties, damping Europe’s fragile economic recovery.

“If you take a step back, Deutsche Bank’s solvency doesn’t seem to be a critical risk yet,” said Ed Al-Hussainy, senior global interest-rate analyst at Columbia Threadneedle Investments in Minneapolis. But “if it does start to happen, it happens pretty quickly, and I’m cognizant of that.”

The concerns picked up two weeks ago when The Wall Street Journal reported that the U.S. Justice Department floated the idea of Deutsche Bank paying $14 billion to settle a series of high-profile mortgage-securities cases. The bank responded by saying it had no intention to pay “anywhere near” that amount, and said its negotiations with the Justice Department were just starting.

The disclosure sparked fears that Deutsche Bank might have to mount a painful capital hike.

[onlooker]

The potential collapse of Deutsche Bank and the systemic risk it poses to banks and the European financial and monetary system moved into the German political sphere yesterday. The German government denied it was preparing a rescue of the embattled bank and the Bundestag attempted to ask questions of ECB President Mario Draghi about the causes of the "systemic risks" posed by the bank.

http://www.zerohedge.com/news/2016-09-2 ... t%E2%80%9D

[Plantagenet]

Merkel generally opposed bailouts of banks in other EU countries. She kept kept saying they should clean up their act and be more like DB and other German banks. Now that DB is in trouble, Ii will be interesting to see if Merkel flip flops and backs a bailout for DB.

[peripato]

Here's a word from the chairman of Deutsche Bank to his employees:

"You can tell them that Deutsche Bank remains absolutely rock-solid, given our strong capital and risk position."

See, it's all fine now.