Executive Intelligence Review


European Central Bank Seeing Trouble at Deutsche Bank

April 16, 2018 (EIRNS)—Germany’s Süddeutsche Zeitung newspaper for April 16 reported that the European Central Bank (ECB) has asked that Deutsche Bank simulate what a “crisis scenario” would look like, and what it would cost to complete a “resolution” of its own investment banking division.

Deutsche Bank, now largely run from London, is one of Europe’s largest banks and has had the largest financial derivatives exposure of any bank. Its investment bank has lost money for the past three years, and its British CEO, John Cryan, is being replaced.

Süddeutsche Zeitung says this is the first time that the ECB supervisory authority has demanded such a measure from a major bank.

“According to the report, banking regulators want to know what the impact would be on the value of Deutsche Bank’s capital market and derivatives business if, as a solvent bank, it had to simulate an abrupt end to new business.”

Deutsche Bank itself apparently told European financial journalists that the ECB would soon require such crisis scenarios from other major banks in Europe. Whether that is true, or self-defense, it is clear the ECB is worried about bank trouble. Banks in the United States and Europe are reporting large earnings and projecting a serene picture, while economic growth is extremely low—they were doing the same thing in 2007 before the last crash.