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- German bank market dominated by Deutsche Bank and Commerzbank, both at all time lows.
- European Central Bank about to start asset-backed security purchases.
- German banks about to have their bad debt bought off them.
- Could this be the start of the share price recovery for Deutschebank and Commerzbank?
Deutsche Bank Is A Good Buy If You Believe In Europe
- Deutsche Bank's massive footprint has made managing the bank tough since the Crisis.
- The bank is highly leveraged to capital markets especially in the fixed income arena.
- If Europe starts to recover more strongly the bank could have outstanding upside, if Europe does not recover, downside is limited at current prices.
- Companies like BlackRock and Vanguard will benefit from the current price wars, but it will not prove to be beneficial for Deutsche Bank.
- Due to the impressive figures being recorded by the ETF over the last many quarters, it is expected that it will grow at a tremendous rate in the coming years.
- However, under the given circumstances, it is predicted that exchange traded fund assets for Deutsche Bank will experience a sluggish growth in the next few years.
Buy Deutsche Bank On Cheap Valuation And ECB Action
- Action from the ECB will benefit Deutsche Bank.
- Deutsche Bank trades at a cheap forward P/E of 7.97.
- Deutsche Bank could appreciate around 23% from current levels.
- Deutsche Bank's internal controls and regulatory reporting were found deficient by the NY Fed.
- DB has violated the trust of its regulator and thus, investors should be very wary of its financial reporting.
- We'll discuss implications for shareholders.
- DB is experiencing a secular decline in sales revenue.
- Statistics assume that this is a decent opportunity for the long term.
- Earnings/cash flows are highly volatile, thus forward multiple appears to be unreliable.
- The long-term technical situation is becoming highly favorable.
Former Deutsche Bank Trader Fined $17 Million, Scandal Continues
- The UK’s Financial Conduct Authority recently fined Deutsche Bank trader Christian Bittar $17 million for trying to rig the benchmark interest rate.
- This is the latest in a series of public incidents involving Deutsche Bank, along with very poor Q1 results and market declining performance YTD.
- While some suggest Deutsche Bank is at a turnaround point, we are not yet convinced DB is a buy in 2014.
- Deutsche Bank is one of the world's leading global banks and the German market leader.
- The bank's default probabilities are high relative to peers, and it would take a 33% stock price rise to bring default risk to peer levels.
- Ranked by the credit spread to default probability measure, the bank's bonds trade in the top 45% of the value ranking. Good, but not great.
Avoid Deutsche Bank On Poor Earnings And Regional Instability
- Review of Deutsche Bank's earnings and the impact of regional geopolitical events.
- Major Russian banking and gas stocks have been hit due to recent regional events.
- A wait-and-see approach over the summer is the best approach on Deutsche Bank.
Mon, Oct. 27, 12:52 PM
- “Judging from the market reaction today, investors don’t completely believe in the ECB," says Peter Garnry, head of equity strategy at Saxo Bank. "They are more pessimistic on the banks."
- Financial firms were among the worst performers today following the release of ECB stress tests over the weekend, falling 0.9% vs. the Stoxx Europe 600's decline of 0.6%. Hardest hit were the Italian lenders after that country's banks made up a disproportionate share of those who failed the exams. Not failing, but nevertheless hit: Unicredit (OTCPK:UNCFF, OTC:UNCFY) -2.6%, Intesa Sanpaolo (OTCPK:IITOF, OTCPK:IITSF, OTCPK:ISNPY) -3.1%. Italy's FTSE MIB index (NYSEARCA:EWI) led European declines, falling 2.3%.
- Also taking a hit despite no issues from the stress tests were Europe's larger banking powers: Santander (SAN -3%), Deutsche Bank (DB -1.6%), ING (ING -1.8%), BBVA (BBVA -2.3%).
- EUFN -1.4%
- Previously: ECB stress test failures centered among Italian banks
Tue, Jul. 22, 3:51 PM
- Deutsche Bank (DB -3.1%) drops sharply after WSJ reports an examination by the New York Fed found the bank's U.S. operations suffer from several serious problems, including shoddy financial reporting, inadequate auditing and oversight and weak technology systems.
- In a letter to DB last December, a senior NY Fed official reportedly wrote that financial reports produced by some of the bank's U.S. operations "are of low quality, inaccurate and unreliable" to the extent that DB's "entire U.S. regulatory reporting structure requires wide-ranging remedial action."
- The letter was said to have ordered senior DB execs to ensure steps were taken to fix the problems, and that the bank might have to restate some of the financial data it has submitted to regulators.
Thu, Jul. 10, 9:44 AM
- When the going gets tough, the tough suspend trading. Portugal has halted trade in Banco Espirito Santo with the stock off 17.2% on the session and 54% over the last month. At issue are financial troubles for the bank's privately-owned holding company, Espirito Santo International. Its accounts are currently under review by an external auditor who has identified irregularities and concluded the company "is in serious financial condition."
- Santander (SAN -5.8%), UBS (UBS -1.8%), Deutsche Bank (DB -3.1%), Bank of Ireland (IRE -5.6%), Credit Suisse (CS -2.8%), ING (ING -3.2%), BBVA (BBVA -3.1%). U.K. banks: Barclays (BCS -3.8%), RBS (RBS -1.9%), HSBC (HSBC -1.9%), Lloyds (LYG -2%).
- European financial sector ETF: EUFN -2.4%.
Wed, Jul. 9, 8:12 AM
- Responding to news on a couple of European lenders, JPMorgan upgrades Deutsche Bank (DB) to Overweight citing the recent capital raise, and downgrades BNP Paribas (BNPZY) to Neutral, citing lower capital returns following the $8.9B U.S. criminal settlement.
- Deutsche is up 1% premarket; BNP is lower by 1.3% in Paris action.
Thu, Jun. 5, 2:51 PM
- “The extent of Deutsche Bank’s (DB -3.2%) financial exposure to these matters could be material, and Deutsche Bank’s reputation may suffer material harm as a result," says the bank in the prospectus related to its capital raise.
- No criminal charges have been filed over currency market manipulation, but more than two dozen traders have been fired across a number of banks. What's more, prosecutors - having wrung a guilty plea and massive fine out of Credit Suisse and about to do the same with BNP Paribas - have now gotten the taste of blood, and may have found they like it.
- Deutsche today raised €8.5B in an equity offering and plans to raise another €6.75B through a rights offering expected to be completed this month.
Thu, Jun. 5, 7:55 AM
- The Stoxx 50 (FEZ) is up 0.8% after being about flat ahead of the ECB rate decision, at which the central bank cut all three of its benchmark rates, including taking the deposit facility rate into negative territory.
- Italy (EWI) with a 1.3% gain and France (EWQ) ahead 1% lead the way.
- The euro (FXE) tumbles about 40 pips, now off 0.3% on the session and buying $1.3563.
- Europe equity ETFs: RSX, VGK, EWG, FEZ, GREK, EWP, EWI, DFE, RUSL, IEV, RSXJ, EWL, ERUS, EWU, RUSS, EPV, EZU, EWD, HEDJ, NORW, EWQ, EPOL, EIRL, PLND, EWO, RBL, GXF, EWN, FEU, EWK, FDD, EWGS, FEP, EDEN, UPV, EWUS, DBGR, PGAL, ADRU, ENOR, GERJ, DXGE, FEEU, FGM, EURL, FKU, EFNL, EUDG, DXPS, FSZ, EURZ, FIEU, RUDR, DBEU, HEWG, DBUK
- Euro ETFs: FXE, EUO, ERO, DRR, EUFX, ULE, URR
- ECB chief Mario Draghi's press conference begins at 8:30 ET.
Thu, Jun. 5, 7:07 AM
- Deutsche Bank (DB) reportedly has priced its €8.5B equity sale at €22.50 per share, higher than the €21-€21.50 price rumored yesterday. Still that price represents a 24% discount to the bank's current share price.
- The stock's lower by 1.3% in premarket action.
- Previously: Deutsche Bank capital raise set for sizable discount
Wed, Jun. 4, 9:09 AM
- "Underperformance has left CS shares with 35% upside potential to our target price, one of the highest in the sector," says analyst Jernej Omahen, upgrading the stock to a Buy and adding the name to Goldman's Conviction List.
- "Our analysis underlines that Credit Suisse's business mix embeds strategic optionality for group ROE expansion that other, non-Swiss, investment banks don’t have." The bank's "reorientation" towards private banking and wealth management could: 1) Improve returns; 2) Improve capital generation; 3) Reduce TBTF risk; 4) Close the valuation gap with UBS, which currently trades at a 51% premium based on 2104 earnings estimates, and a 42% premium based on 2015 price/tangible book value.
- Shares +1.4% premarket
- Goldman also pulls its Sell rating on Deutsche Bank (DB) citing the recent capital raises (the latest one is today) and the bank's new strategic direction.
Mon, May. 5, 10:20 AM
- A check of the global banks finds the group pacing market declines in morning action after Friday night's warning on Q2 trading revenue from JPMorgan (JPM -2.2%).
- Nomura's Steven Chubak is first out with lower JPMorgan earnings estimates.
- Jim Cramer sums up sentiment: "This has been a house of pain. You can't own these right now. You just can't."
- Morgan Stanley (MS -1.9%), Goldman Sachs (GS -1.5%), Citigroup (C -1.2%), and Bank of America (BAC -1%), Deutsche Bank (DB -1.2%). Far less trading dependent than the other Too Big Too Fails is Wells Fargo (WFC -0.2%).
- The iShares DJ U.S. Broker-Dealer ETF (IAI -1.2%)
- XLF -0.7%, KBE -0.8%
- ETFs: XLF, FAS, FAZ, UYG, VFH, IYF, IAI, SEF, IYG, PFI, FXO, FNCL, KBWB, FINU, KCE, RWW, RYF, PSCF, FINZ, KBWC
Tue, Apr. 29, 8:57 AM
- Incoming draft rules from the EBA on how banks value illiquid assets could cause a capital gap of up to €2B warns, Deutsche Bank (DB) CFO Stefan Krause, and force the need for an equity raise. Krause's comments came as he and co-CIO Anshu Jain took questions following the bank's quarterly earnings report. The €2B figure is roughly inline with what analysts had been expecting.
- Previously: Deutsche Bank net profit drops 34% but beats expectations
- The stock's ahead 2.7% premarket, it's big decline this year likely already pricing in a capital raise and this morning's weak quarterly results.
Thu, Apr. 3, 7:29 AM
Mon, Jan. 20, 6:10 AM
- Deutsche Bank's (DB) shares slide 3.6% in Frankfurt after the bank published its Q4 results early and reported a pretax loss of €1.2B. The figure badly missed consensus for a profit of €628.5M, although it was down from a loss of €3.17B a year earlier.
- DB also warned that it expects "2014 to be a year of further challenges and disciplined implementation," but it is still confident of achieving its 2015 targets.
- Q4 net loss €1B.
- Deutsche Bank's losses were partly caused by reorganization costs, and charges to adjust credit, debt and funding valuations, as well as by litigation.
- Revenue at Deutsche Bank's investment banking and trading unit tumbled 27% to €2.46B, hurt by a 31% drop in bond and other fixed-income trading. That compares with an 8% fall for U.S. banks. Revenue from trading equities rose 8%.
- Tier 1 equity 9.7%.
- Despite the loss, JPMorgan analyst Kian Abouhossein remains bullish. "Deutsche Bank management deserves credit," Abouhossein says. The firm "is still in restructuring mode but management has delivered on our wish-list of aggressive exposure reduction, bringing forward cost savings and settlement of some litigation." (PR)
Fri, Jan. 17, 2:13 PM| Comment!
Sep. 25, 2013, 9:43 AM
- Speaking at BAML's Banking and Insurance Conference in London, Deutsche Bank (DB -1.6%) co-CEO says the bank expects a "significant" drop in Q3 trading revenue.
- The announcement isn't unexpected, and follows a similar warning from Citigroup over the weekend, numerous other rumblings from investor conferences this month, and Jefferies' already reported ugly (from a trading standpoint) Q3.
- Previous: FICC trading revenue has been slipping for years and should be in analyst models by this point.
- Banks (KRE -0.6%), (KBE -0.4%) again are leading the market decline.
- Financials ETFs: XLF, IYF, PFI, VFH, RYF, RWW, FAS, UYG, FAZ, SKF, SEF, IAI, FXO, PSCF, KBWD, KBWB, IYG, FINU, FINZ.
Sep. 23, 2013, 7:36 AM
- Citigroup (C) slips 1% in the premarket after its weekend "pre-announcement" of a big fall in FICC revenue in Q3. The bank had been hoping to get bailed out by a big September, but the Fed's non-taper last week squelched the chance of major portfolio moves by clients.
- Anybody paying attention surely noticed last week's evaporation of profit at Jefferies (now owned by Leucadia) as fixed-income trading revenue essentially disappeared.
- Deutshce Bank (DB) is expected to soon be out with a warning similar to Citibank's. Barclays (BCS) and Credit Suisse (CS) have already waved their own red flags over this issue.
- Not yet heard from are Goldman (GS), Morgan Stanley (MS), JPMorgan (JPM), and BofA (BAC), but Goldman is also off nearly 1% premarket.
Jul. 30, 2013, 3:32 AM
- Deutsche Bank (DB): Q2 pretax profit -18% to €792M, badly missing consensus of €1.3B. Net profit -49% to €335M vs forecasts of €767.6M. Revenue +2% to €8.2B.
- Increases legal provisions by €630M to €3B and expects "settlements to accelerate in the coming quarters," although the bank doesn't provide details on which issues are set to be resolved.
- Deutsche Bank plans to reduce assets to bring its leverage ratio to 3% and has identified €250B worth to cut. Shares -4% in Frankfurt. (PR)
DB vs. ETF Alternatives
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