Deutsche Bank Shares Soar -- Update
10 February 2016 - 11:13PM
Dow Jones News
By Andrea Thomas
Shares in Deutsche Bank AG rose 13% on Wednesday following news
that the German lender is considering buying back some of its
debt.
The rally follows sharp falls in Deutsche Bank's share price in
recent sessions. Shares in the bank have fallen 31% so far this
year amid a broader selloff among European lenders on investor
concerns about lenders' capital buffers and ability to navigate
volatile markets.
The selloff has prompted concerns in Germany that the
instability in the financial sector could spread to the real
economy.
The German Chambers of Commerce, or DIHK, which represents some
three million businesses, on Wednesday said the ability of small-
and medium-size companies to secure financing could be
compromised.
"There is nobody who is happy about what's happening right now,"
said DIHK managing director Martin Wansleben. "We need strong
banks."
So far the pain being endured by Europe's banks has been broadly
attributed to investors expressing specific doubt about individual
banks, the sector and the strength of global growth. But signs or
suggestions that businesses and individuals are feeling knock-on
effects are likely to deepen concern.
Deutsche Bank shares rebounded strongly Wednesday after a person
familiar with the matter confirmed the lender's executives had been
discussing buying a chunk of its own debt to convey their view that
the market is undervaluing its securities. The plans were first
reported by the Financial Times.
Germany's finance minister, Wolfgang Schäuble, said Tuesday that
he has "no concerns about Deutsche Bank," at a finance conference
in Paris. A Finance Ministry spokeswoman said Wednesday that the
government has no plans to hold top-level talks about Germany's
banks.
Also on Tuesday, Deutsche Bank co-Chief Executive John Cryan
wrote in a letter to colleagues that the German lender remains
"rock-solid," despite the pasting being taken by its shares.
The bank has been among the worst-hit among big investment banks
hammered recently amid concerns about worsening market conditions
and banks' vulnerability to losses.
Mr. Cryan went on to reassure them that the bank's financial
plans already include enough cash set aside to pay bondholders and
legal bills, but conceded that some investors don't appear
convinced, as evidenced by "recent market concern."
Investors around the world are concerned about a number of
factors, including slowing growth, depressed energy prices and the
prospect of negative interest rates in several major economies.
When rates are negative, central banks charge lenders for holding
reserves, a factor that could hurt bank profits.
Christian Grimm in Berlin contributed to this article.
Write to Andrea Thomas at andrea.thomas@wsj.com
(END) Dow Jones Newswires
February 10, 2016 06:58 ET (11:58 GMT)
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