Wednesday 21 February 2018

Deutsche Bank boss pressed to say it's 'rock solid' after shares tank

Deutsche Bank's John Cryan:
Deutsche Bank's John Cryan:

DEUTSCHE Bank boss John Cryan has sent a memo to staff telling them the institution is "rock solid."

In the memo released to employees today, he told colleagues to reassure clients that “Deutsche Bank remains absolutely rock-solid.”

Earlier the bank said it has "sufficient" reserves to make due payments this year on AT1 securities, seeking to calm investors after its shares plunged almost 10pc on Monday.

They fell further today.

Germany's biggest lender has a "payment capacity" of about €1bn to pay interest on so-called Additional Tier 1 (AT1) bonds worth 350 million euros by April 30, the bank said in a statement published on Monday after business hours.

Deutsche Bank said its estimated "payment capacity" for next year is about 4.3 billion euros before 2016 operating results, and mentioned having about €1.6bn in proceeds from the sale of its 19.99 percent stake in Hua Xia Bank.


Frankfurt-based Deutsche Bank said it will also draw on reserves of about 1.9 billion euros "to offset future losses."

Investors' worries are related to European banks' contingent convertible bonds or "CoCo bonds" whose prices have been hammered and prompted hedging via credit default swaps (CDS).

CoCos are bank bonds that share the loss-absorbing characteristics of equity.


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