Stock markets were rocked on Thursday after the emergence of reports that some customers of Deutsche Bank, struggling German lender, and reduce their exposure.
The shares tumbled in the United States, 6.7 percent for the day, after falling as much as 9 percent,
in heavy trading on unusually. It helped slide in the afternoon demolition of financial stocks and the broader market.
This year, Deutsche Bank shares have fallen 53 percent,
hit by fears that have little money for its budget € 1800000000000 (2020000000000 $), which has a share of more complex, harder to sell securities from its peers.
Over the past year, and investors expressed negative due to the bank by reducing its shares, or betting that the stock price will drop sharply.
As stocks have reached historic lows,
and with the continued uncertainty about whether the German government has no plans to intervene,
and some investors rethink about using Deutsche Bank as the counterparty.
He said a long-term customer,
who did not reveal his identity because he does not want to jeopardize his relationship with Deutsche Bank on Wednesday that he is no longer used for the trading of complex securities,
which require a business partner that is big and it has easy access to pools of liquidity.
On Thursday, a day after trading was over in Frankfurt,
Bloomberg reported that 10 hedge funds had removed some of the cash reserves of the bank.
But Barry BAUSANO, who oversees relations hedge funds,
Deutsche Bank, pointed out that the company’s business and prime brokerage has about 800 hedge fund clients, a figure that fluctuates week to week.
Mr. BAUSANO also pointed out that the environment for hedge funds has recently defied,
as they struggle with poor performance and redemption pressures.
“We have to swing up and down in this business every week,” he said.
Many clients, Deutsche Bank, in fact, say that they have no problems with the use of the bank to buy and sell liquid securities such as stocks.
They say they are comfortable using the Deutsche Bank for such deals because they are confident that the German government did not let it fail.
To provide all types of lending and trade services to hedge funds and other investors,
Deutsche Bank is one of the elite practitioners in the street, with large commercial centers in London and New York.
In the language of traders, it called the bank “flow monster”,
in the sense that it makes money by picking up a piece of the trillions of dollars of bonds and equities that are the lifeblood of the global financial system today.
But this situation is just as good as the confidence that investors and hedge funds of the institutions have in the bank to make good on deals and be an agent for good assets, which was parked there.
Making matters worse for Deutsche Bank is that short-term rates tied to LIBOR, or London interbank rate –
the standard used when financial institutions borrow money –
was as high as a result of fears of rising interest rates and a scarcity of ready cash prices in the market.
High rates and concerns about the financial health of the bank can be enough for some customers to take their business elsewhere.
Raul said Pal, an independent research who was a vocal critic of the bank for several years the company “?
Why do you keep collateral with Deutsche Bank for the time being.
” “If you hedge funds now, you have to start pulling lines and go somewhere else.”
Because of its size, the analysts do not expect Deutsche Bank to fail, as did Lehman Brothers in September 2008,
and in the process of closing the door to billions of dollars that were investment funds in the bank.
But because of political opposition in Germany to any form of assistance to banks in distress,
especially before important elections in the autumn, the situation will deteriorate significantly to demand state intervention.
Which is part hardening resistance to the bailout deal, which Deutsche Bank, since 2009,
the market for 13 billion euros in cash exploited,
while the payment of € 19 billion in bonuses, according to data compiled by Autonomous Research.
“It is all about confidence now,” said Julian Brigden,
an independent market analyst in the Macro Intelligence 2 Partners, an independent research company that provides services to hedge funds, based in Vail, Colo.
“If the customer some derivatives at Deutsche Bank, he start thinking – will I get paid? Things get out of hand quickly. “