Deutsche Bank: Flash info

• Sharp fall of the share price today after large rebound since Monday morning. 

• Widening of the CDS since Thursday.

It is always hard to rationalise such moves but here is our attempt:

• Even if DB is very different from CS (see below) the immediate reaction to the events on CS have often been "What about Deutsche?". A few years ago, Deutsche looked very much like CS now and it's still on many people's mind.

• News flow: nothing much, just news yesterday of global investigations by OFAC on Russian sanctions. DB could be involved (but no specific news unlike UBS & CS.).

• The US have had a very confusing communication on their banking crisis. Deposit guarantees remain on the agenda but with contradictory statements from Yellen, Powell, etc. First Republic is still not solved and highly unclear. The general problem of unrealised losses and deposit stability remains. In that context, people are reducing exposure ahead of the weekend (expect news on First Republic).

• Some IBs have probably been hedging their counterparty risk on Deutsche post Credit Suisse crisis. This is mostly done through the CDS market. Since FRTB rules the single name market is very illiquid and small flows are enough to move prices a lot.

• DB called a Tier 2 bond this morning : www.db.com/news/detail/20230324-deutsche-bank-announcesdecision-to-redeem-its-fixed-to-fixed-reset-rate-subordinated-tier-2-notes-due2028 This is normally a very good piece of news, both from a pure P&L point of view and it shows that the ECB is comfortable with DB (DB had to ask permission to the ECB before taking this decision). However, in volatile markets, this can be interpreted as DB wanting to show they are strong...meaning they are not!

You can find more details in the article below.