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Why the Cost of Hedging European Banks Stocks Has Soared

Deutsche Bank Said to Pay EU2B to End Libor Probes
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Anyone wondering why it costs so much to protect against losses in European bank stocks in the options market saw the reason on Monday.

Shares of Deutsche Bank AG slid 4.6 percent to 30.13 euros, the biggest drop in 15 months, as the lender lowered a profitability target and set a plan to cut costs, in a sign that the industry may be poised for declines. That’s even after first-quarter earnings exceeded analyst estimates and the Frankfurt-based company posted near-record revenue. It had rallied 26 percent this year through Friday.