4 ms·

It will be very hard for the German govt to let them fail. They are very much a point of national pride, and deep in the culture. I suspect the ramifications

It will be very hard for the German govt to let them fail. They are very much a point of national pride, and deep in the culture. I suspect the ramifications in Germany would be as big as Bear or Lehman.

premium-concern 10y ago
No.
gurkendoktor 10y ago
Maybe that's true in upper-class circles? Everyone in my bubble is a customer of either Sparkasse, Volksbank or ING DiBa. If it weren't for the constant stream of negative headlines, most people would probably forget about DB altogether. Letting ANY German bank fail would make our govt look bad, though, after all the posturing during the Greek crisis.
- jsdalton 10y ago
  > Everyone in my bubble is a customer of either Sparkasse, Volksbank or ING DiBa. As an aside, do you have any opinion on the merits of these institutions for personal banking? (I assume you are in Germany.)
  - dolguldur 10y ago
    Checkout ING DiBa, DKB, and Number26
  - gurkendoktor 10y ago
    I'm a big fan of the ING DiBa VISA card which lets you withdraw money for free at many (most?) ATMs in the Eurozone. My experience with their customer service has also been much better than either Volksbank or Sparkasse. I have a second credit card from DKB because withdrawing money abroad is "free" (there's still a fee for currency conversion though, if I'm not mistaken).
cm2187 10y ago
I don't know about DB specifically, so I am not making any statement on their financial health. But if they were to collapse, I think neither a bail out or a bankruptcy would be the most likely scenario. The most likely scenario would be a bail-in, which I think few people outside of the financial community is aware of and understands. Bail-in is the power given to the regulator to declare a bank non viable and to impose losses on its creditor over a week end, and as a result auto-recapitalise the bank, which will be open for business and healthy the following Monday. You can see it as a flash, extra-judiciary chapter 11. The regime is designed to impose losses on regular creditors (bond holders), rather than clients taking a credit exposure to the bank through derivatives or deposits, even if in a bankruptcy these would have the same ranking and should suffer the same losses. This should reduce a lot the disruption on the market of a bank going bad. Banks have been required to hold minimum levels of bailinable wholesale debt to ensure regulators can do a large scale bail-in. Politically, this would be the safest route for the German gvt, as it doesn't use tax payer funds and does not let bank investors get away scars-free. Again, hypothetically. I don't know about DB specifically and to be honest am a bit surprised by the alarmist statements I read. [edit] actually looking at their annual report, they report a fully loaded CET1 ratio of 11.1% which is decent. Banks are way better capitalised than in 2006: https://www.db.com/ir/en/download/Deutsche_Bank_Annual_Report_2015.pdf https://www.db.com/ir/en/download/Deutsche_Bank_Annual_Repor...

premium-concern 10y ago

No.

gurkendoktor 10y ago

Maybe that's true in upper-class circles? Everyone in my bubble is a customer of either Sparkasse, Volksbank or ING DiBa. If it weren't for the constant stream of negative headlines, most people would probably forget about DB altogether. Letting ANY German bank fail would make our govt look bad, though, after all the posturing during the Greek crisis.

jsdalton 10y ago
> Everyone in my bubble is a customer of either Sparkasse, Volksbank or ING DiBa. As an aside, do you have any opinion on the merits of these institutions for personal banking? (I assume you are in Germany.)
- dolguldur 10y ago
  Checkout ING DiBa, DKB, and Number26
- gurkendoktor 10y ago
  I'm a big fan of the ING DiBa VISA card which lets you withdraw money for free at many (most?) ATMs in the Eurozone. My experience with their customer service has also been much better than either Volksbank or Sparkasse. I have a second credit card from DKB because withdrawing money abroad is "free" (there's still a fee for currency conversion though, if I'm not mistaken).

cm2187 10y ago

I don't know about DB specifically, so I am not making any statement on their financial health. But if they were to collapse, I think neither a bail out or a bankruptcy would be the most likely scenario. The most likely scenario would be a bail-in, which I think few people outside of the financial community is aware of and understands. Bail-in is the power given to the regulator to declare a bank non viable and to impose losses on its creditor over a week end, and as a result auto-recapitalise the bank, which will be open for business and healthy the following Monday. You can see it as a flash, extra-judiciary chapter 11. The regime is designed to impose losses on regular creditors (bond holders), rather than clients taking a credit exposure to the bank through derivatives or deposits, even if in a bankruptcy these would have the same ranking and should suffer the same losses. This should reduce a lot the disruption on the market of a bank going bad. Banks have been required to hold minimum levels of bailinable wholesale debt to ensure regulators can do a large scale bail-in. Politically, this would be the safest route for the German gvt, as it doesn't use tax payer funds and does not let bank investors get away scars-free. Again, hypothetically. I don't know about DB specifically and to be honest am a bit surprised by the alarmist statements I read. [edit] actually looking at their annual report, they report a fully loaded CET1 ratio of 11.1% which is decent. Banks are way better capitalised than in 2006: https://www.db.com/ir/en/download/Deutsche_Bank_Annual_Report_2015.pdf https://www.db.com/ir/en/download/Deutsche_Bank_Annual_Repor...