Deutsche Bank Permanently in Crisis. What Next?

Dear Reader,

Deutsche Bank has been in crisis since 2016. Currently Deutsche's market capitalization is below 30 bln. USD.

Why is Deutsche Bank in crisis. The main reason, as far as I am concerned, is that the bank took too much risk in the run up to the Great Recession(2008-2009). Deutsche Bank has a staggering derivatives exposure of circa 46 trillion Euro notional. Basically, the bank has to offload all toxic derivatives on its balance sheet in order to remain viable.

Will Deutsche survive on its own? According to me, the short answer is NO. Why? The bank is trading at distressed levels currently with market capitalization of 29.60 bln. USD, while its balance sheet has staggering 1.475 trillion EURs of assets. The bank is a classical takeover target. The problem is no one seems to want it? And why should the other banks want Deutsche Bank? To incur mutlibillion losses due to Deutsche Bank's derivatives exposure?

What will happen with Deutsche Bank? Essentially, there are several options. The German government could take over and restructure the bank for 4-5 years and re-privatize it again. This option, however, is unpalatable to both the German government and Deutsche's shareholders. The second option is Deutsche muddles along, cleans its balance sheet and in 4-5 years starts growing extensively again. The third option is a takeover. I view takeover of Deutsche Bank as the most likely option. The acquirer, though, has to be prepared to swallow billions in losses while the acquiring bank restructures Deutsche.

Basically, Deutsche Bank is in for a rough ride in the next 4-5 years. There will be several rounds of cuts, especially in the investment bank. Billions of losses will be accounted for.

P.S. I do realize I am talking about Deutsche Bank, Europe's biggest investment bank by revenue! Actually, I spent two and a half months as an intern at DWS(Deutsche Asset Management). But the hard facts cause me to express the opinions above.

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Kind regards,
Petar Posledovich