Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Deutsche Bank’s Stock Down 91.5%: New Lows Since 2009 Crash

Published 06/22/2018, 01:04 AM
Updated 07/09/2023, 06:31 AM

A few years ago, I wrote an issue for Boom & Bust outlining the biggest problems in the Eurozone after the QE-stimulated recovery that saved the banks and financial system from going under. The point made was that Italy was still bankrupt at the banking level, and in dangerous levels of public debt. Deutsche Bank (DE:DBKGn) was not recovering with other banks, and instead was languishing near the lows with other major Italian banks…

I looked at Italy in a recent post. And now I want to update you on Deutsche Bank, as it has recently hit new lows since late 2016 and the crash in early 2009.

How could such a prominent bank be hitting new lows after over nine years of an economic recovery, albeit a more reserved one?

Deutsche Bank Stocks Low

This stock peaked on May 11, 2007 at $116.40 at its close (with an $152.44 intraday high). It crashed down to a low of $17.20 on February 23, 2009, an 85.2% loss. After rallying a bit in 2009, it recently hit a substantial new low of $11.00 on June 5…

That’s down 91.5% from its all-time high.

This, again, only topped a by a few large banks in Italy. It’s a clear sign of trouble for Germany’s flagship bank, and will almost certainly go under in the coming years if it’s performing this badly now.

I’ll keep it simple: Deutsche Bank had, and still has, the highest exposure to derivatives – the most toxic and most leveraged of financial assets – of any bank in Europe, and globally.

And like many large French banks, it has a lot of bad loans, especially to ailing Italian companies.

Deutsche Bank is the most obvious sign of how challenging the bad debt situation still is in the Eurozone, with Italy, alone, housing 40% of the non-performing loans.

Now, let’s contrast that with the U.S…

SP Bank ETF

The S&P Bank EFT (KBE) shows U.S. banks are doing much better. But from how we see things, they’re still in trouble if there’s a recession (depression) and real estate crash worse than last time – as I expect to happen.

This index peaked on February 20, 2007, as the subprime crisis was starting to rear its ugly head, at $47.60.

It crashed 80.5% to $9.30 on March 6, 2009.

By March 12 of this year, it peaked at $51.90. That’s a 9.0% gain over its high in 2007.

Banks in the U.S. aren’t as healthy as they look though…

After being bailed out and propped up by QE and free money over the past nine years, the banks have greatly underperformed.

A broader look at the S&P 500 suggests new all-time highs 82.5% higher than in 2007 on January 26 – and looks to go higher before a likely very long-term peak.

I expect a retest of the 2009 lows, and likely lower for the U.S. banks.

If that’s the case, Deutsche Bank will be taken over by the German government, or merged into another financial institution like Bank of America (NYSE:BAC) was into Merrill Lynch in the last financial crisis…

And Europe will be in a deeper crisis than the U.S…

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.