The German bank presents positive results in the advance of its second trimester and surprises investors helping to alleviate the doubts about it being a new crisis
After three consecutive years of negative results, Deutsche Bank has defended itself from its imminent fall by presenting an increase of 820 million dollars in the quarterly profit before taxes and in its estimated net profit of 468 million dollars for 2018, as well as a significant increase in the stock market. These figures surpass what was predicted by financial analysts who put Deutsche Bank's profits at 186 million dollars in net profits, according to CNN.
Deutsche Bank has been dragging that crisis since 2016. In that year the German bank had the uncertainty of a possible sanction on the part of the Department of Justice of the United States that ascended to 14 trillions of dollars, according to The Guardian. That sanction, which did not happen, plunged the bank into an investment crisis that put its value in the stock market at close to historical lows, reaching even a value of 7.03 dollars in stocks.
Although the worst results have been seen in recent years, the problems of Deutsche Bank can be traced back to the global crisis of 2008, when the closure of the American investor Lehman Brothers hit hard the financial system. As a result, the German bank had the first losses recorded since the Second World War, according to the German newspaper Spiegel.
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The Deutsche Bank is cataloged in the financial system as "too big to fail", that is, a bank big enough so that the consequences of its bankruptcy do not affect much of the context in which it develops. In Germany, for example, the Deutsche Bank represents almost half of the economy of this country, valued at 1.8 trillion euros in 2016. This concept causes banks to make risky business decisions relying on a possible state rescue. However, the Deutsche Bank has been very emphatic for several years that it will not take that kind of help from the German government, as CNBC says.
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Highlights then the increase in the investment in the stock market of the German bank, which it is possible to relate to the rumors that link the U.S. company JP Morgan and China's ICBC (Industrial and Commercial Bank of China) with Deutsche Bank. On this, it is presumed an interest of these companies in having a greater presence in the heart of Europe after the changes produced by the Brexit. These rumors were backed by a supposed meeting between the German Chancellor Angela Merkel and the former president of the Deutsche Bundesbank, Angel Weber, with the aim of knowing the opinion of the latter on the financial situation of the largest bank in Germany. However, the German government has denied this information, according to Reuters.
The future of Deutsche Bank now depends on keeping its strength in the stock exchange, because otherwise it would be obliged to ask for a ransom. Before the surprising rise in the stocks, its outlook looked unpromising. As Reuters mentions, the Federal Reserve (Fed) of the United States said that of the 35 financial institutions that were examined, Deutsche Bank would be the only bank that would not overcome a new crisis. So the German giant, one of the biggest in Europe and in the world, would be at risk if it faced with that situation.
LatinAmerican Post | Jorge Ovalle
Translated from "Después de dos años, Deutsche Bank presenta los primeros resultados positivos en la bolsa"