German Banks Decline as Greek Talks Drag on: Frankfurt Mover
Deutsche Bank fell 3.3 percent to 32.39 euros ($42.51) and Commerzbank slipped 3.1 percent to 1.82 euros in Frankfurt by 10:51 a.m. local time. The DAX, which tracks 30 of the country’s biggest companies, fell 0.9 percent to 6,451.20.
Private creditors said they expect to complete a debt-swap accord this week as talks with European officials continue even after Economic and Monetary Affairs Commissioner Olli Rehn said Jan. 27 he anticipated an agreement that day or over the weekend. Bondholders agreed to implement a 50 percent cut in the face value of debt three months ago. A worsening economy since then has made it more difficult to achieve a goal of cutting Greece’s debt to 120 percent of gross domestic product by 2020.
“The fact that it’s taking so long to reach an agreement on Greece is feeding insecurity,” said Andreas Plaesier, a Hamburg-based analyst at M.M. Warburg. “There’s concern that the longer it takes for a deal, the larger the burden for the banks.”
France plans to unilaterally impose a 0.1 percent tax on financial transactions starting in August, President Nicolas Sarkozy said late yesterday, brushing aside opposition from banks.
Separately, the U.S. Securities and Exchange Commission is investigating a collateralized debt obligation transaction, in which Deutsche Bank allowed U.S. hedge fund Paulson & Co. to select mortgage-backed securities, Der Spiegel reported yesterday. This may also be slightly weighing on the bank’s stock today, Plaesier said.
Like other lenders, Deutsche Bank is faced with lawsuits by retail and institutional clients who have lost money in the financial crisis, Frank Hartmann, a Deutsche Bank spokesman said when contacted by Bloomberg News. The lender is looking into the claims carefully and, if they prove wrong, will defend itself vigorously, he said.