Deutsche Bank Falls to Lowest Since 2009 on Turmoil in Marketsby
Deutsche Bank AG, which runs Europe’s biggest investment bank, fell to the lowest in almost seven years as the turmoil in financial markets clouds the outlook for its trading business.
The company fell as much as 5.7 percent and traded 4.9 percent lower at 19.88 euros as of 2:10 p.m. in Frankfurt. That’s the stock’s lowest level since March 2009. Together with Credit Suisse Group AG, the bank led a 2.7 percent decline of the 45-member Stoxx Europe 600 Banks Index.
Global equity markets are off to their worst-ever start to a year as oil plummeted to levels last seen more than a decade ago and China struggled to maintain control over its markets. Deutsche Bank and Credit Suisse, Europe’s biggest traders of stocks and bonds, are pulling out of capital-intensive businesses to lift profitability battered by legal costs and lower client activity.
“Deutsche Bank is an easy target,” said Tomasz Grzelak, an analyst at Mainfirst Bank AG in Zurich who has a neutral recommendation on Germany’s biggest bank. “They’re restructuring, which makes the short-term difficult, and then add the macro uncertainty on top of that with clients going into risk-off mode and hurting their key business of global markets.”
Grzelak, who cut his earnings estimates for Deutsche Bank on Wednesday, said clients holding off investments also bodes ill for the private banking business Credit Suisse wants to grow.
Separately, the Basel Committee on Banking Supervision said on Thursday that banks face tougher capital requirements on swaps, bonds and other securities they intend to trade as part of rules designed to increase their financial strength.
Deutsche Bank’s investment bank probably saw revenue fall 6 percent to 2.8 billion euros ($3.05 billion) in the fourth quarter from a year earlier, Mohamed Souidi, an analyst at Credit Suisse who has a neutral stance on the shares, wrote in an e-mailed report from London on Thursday.
The German bank is scheduled to publish fourth-quarter earnings on Jan. 28.
Barclays Plc, which runs Europe’s third-biggest investment bank by revenue, fell as much as 4.5 percent to the lowest since September 2012 in London. Banco Santander SA, which has lost 10 percent of its value this year, fell as much as 3 percent Thursday.