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Deutsche Bank Shares Plunge to Crisis Level

Updated on
  • Analysts turn sour on ‘damaged franchise,’ cut recommendations
  • Shares tumble to lowest point since before DOJ settlement

Deutsche Bank Declines on Higher Costs, Revenue Miss

Deutsche Bank AG fell to the lowest level since a crisis of confidence in 2016 after its fourth-quarter earnings flop prompted analyst downgrades.

MainFirst’s Daniel Regli lowered his recommendation on the stock to the equivalent of sell on Wednesday, citing the bank’s “damaged franchise as well as a need for substantial restructuring, including the closure of several businesses.” Neil Smith at Bankhaus Lampe cut his target price but kept his buy recommendation.

The Steepest Drop

Deutsche Bank is the worst performer year-to-date among European banks

Source: Data compiled by Bloomberg

Note: Year-to-date percent change in share price

Shares of the bank have lost 11 percent since Friday, when the Frankfurt-based company reported revenue at a seven-year low and declines at businesses from transaction banking to equity derivatives. The sell-off across global equity markets added to the slump, though many of its European competitors posted gains on Wednesday as Deutsche Bank slipped an additional 0.4 percent.

Deutsche Bank struggled to stem its share-price slide and maintain client confidence after the U.S. Department of Justice requested $14 billion in September 2016 to settle a probe tied to sales of mortgage-backed securities. The German lender reached a $7.2 billion agreement in December of that year.

“The goal of forging a safer bank with more reliable earnings streams is not yet clearly in sight,” Moody’s Investors Service analysts led by Peter Nerby wrote in a note to clients Monday. “There are still structural impediments blocking a quick path to restored profitability,” Moody’s said, citing “chronic revenue weakness in key markets and business lines.”

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