Deutsche Bank investors unshaken by U.S. stress test failure

FRANKFURT- On Friday, June 29, 2018-Deutsche Bank investors, look forward to viewing on its failure in this year’s U.S. stress tests, from a record low hit earlier this week. Shares in the German bank, which are down 42 percent this year, were up 1.4 percent at 9.19 euros at 1401 GMT, above Wednesday’s record low of 8.76 euros.

Goldman Sachs, analysts said, “the U.S. Federal Reserve’s issues with Deutsche Bank were “long-standing while UBS said the failure was “not a total surprise”.

Octavio Marenzi, CEO, consultancy Opimas said, “It does seem like Deutsche Bank at the moment is the worst student in the class that can’t get anything right”. He also added, “Deutsche Bank Chief Executive Officer Christian Sewing said the bank was making “good progress” on improving”.

The European Central Bank, which oversees Deutsche Bank, and German financial market watchdog BaFin both, declined to comment.  “We are completely committed to work with authorities to get that even better … over the next year,” The bank said on Thursday it had made significant investments to improve its capital planning capabilities, controls, and infrastructure at its U.S. subsidiary.

Head of credit portfolio management, Michael Huenseler at Assenagon, said: “the Fed’s assessment could spook clients in the United States just as the bank tries to regain its footing thereafter announcing deep cuts in its U.S. and Asian operations”. He also added in the report, “The U.S. plays a major role in their investment banking revenues and if the U.S. doesn’t deliver the results they are expecting, what else does compensate for this? That is really a concern”.

Analysts at UBS also suggested with the reports, “while expected, the Fed’s results are “an unwelcome outcome as it adds to weak sentiment and we think various stakeholders such as clients/counterparts could raise concerns”.

by Sawan Kumar on June 30, 2018

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