- Weidmann says market volatility reflects ``risks to growth''
- Market jitters have depressed share price, Merkel ally said
German Finance Minister Wolfgang Schaeuble said he’s not worried about Deutsche Bank AG after the shares and bonds of Germany’s biggest lender took a battering over investor concern about capital and funding levels.
“No, I have no concerns about Deutsche Bank,” Schaeuble told Bloomberg Television in Paris after a meeting of French and German finance chiefs on Tuesday. He didn’t elaborate further.
Deutsche Bank co-Chief Executive Officer John Cryan told employees in a memo that the bank is “rock solid,” has a “strong” capital and risk position as he reassured the market of the bank’s ability to meet coupon obligations on its riskiest debt. Cryan has been seeking to boost capital buffers and profitability by cutting costs and eliminating thousands of jobs as volatile markets undermine revenue and outstanding regulatory probes raise the specter of continued legal charges.
The cost of protecting Deutsche Bank’s debt against default has more than doubled this year, while the shares have dropped about 39 percent. The shares declined 2.8 percent to 13.44 euros at 4:04 p.m. in Frankfurt after plunging as much as 12 percent on Monday.
The share price drop “isn’t so much a reflection of the business model of the bank, but reflects an overall sense of insecurity in the markets,” Hans Michelbach, a senior finance committee member from Chancellor Angela Merkel’s Christian Union bloc in parliament, said in an interview. Deutsche Bank doesn’t have a liquidity problem and doesn’t need a bailout, he said.
Deutsche Bank’s revenue may fall 3 percent in 2016 and 6 percent in 2017, based on consensus forecasts, said Bloomberg Intelligence Senior Industry Analyst Alison Williams. The lender faces multiple legal risks that could result in future costs, posing capital risk, she said.
Bundesbank President Jens Weidmann said in Paris alongside Schaeuble that the “financial-market volatility we are seeing is an expression of the uncertainty, of these risks to growth” in the global economy. He declined to comment on Deutsche Bank.
Schaeuble took Deutsche Bank co-CEO Juergen Fitschen to task in December 2013 over the need for governments to keep a vigilant watch on banks. Fitschen was “factually wrong” and his tone of voice was “inappropriate” when he labeled Schaeuble’s calls for scrutiny “irresponsible,” the minister said at the time.