The possible effects of the crisis in the Deutsche Bank – Business

the News agency Bloomberg has compiled some of the possible consequences of the crisis at Deutsche Bank.

Problems pile up in the German bankjätten Deutsche Bank. In three years, the share price has fallen 75 per cent and in the summer ranked the IMF bank, which is the world’s most risky.

last week came news that a number of hedge funds were about to leave the bank and the speculation of whether the bank would be able to become a new Lehman Brothers took off. According to Bloomberg, it is highly unlikely. Deutsche Bank’s sources of finance are much more diversified and the balance sheet is much more robust than in Lehman Brothers. Deutsche Bank also has the opportunity to obtain emergency loans from the european central bank ECB. Another difference vis-à-vis the financial crisis is that other banks are better capitalised in the current situation, in particular the u.s., major banks, writes Bloomberg.

READ MORE: New heavy fall in share prices in German major banks

Even if Deutsche Bank does not produce a new Lehman Brothers-scenario, there are four things that investors should be vigilant, writes Bloomberg:

1. The problems in Deutsche Bank is a new blow to their bad reputation. Events of this kind tend to get politicians to speak out negatively about the industry, which can further undermine confidence in the financial sector.

2. The supervisory authorities have the task to ensure the safety of the financial system has once again been an eye-catcher. The risks have now increased for greater political involvement at a time when there is already a major question mark for the ECB’s interest rate policy.

3. The concern for the health of european banks is increasing, which may inhibit the growth of the region. According to Bloomberg, one should expect banks to become more cautious and that they prioritize robust balance sheets before lending to small and medium-sized companies.

4. Due to the world’s banks are strongly interconnected is also the risk of spreading infection great for the bond and the stock market. The problems in Deutsche Bank creates volatility in other banks ‘ capital structures, which increases the risk of a broader instability in the market.