Let us not forget about the monstrous derivative exposure of Deutsche Bank: $72.8 trillion. They’re looking like the next Lehman Brothers.
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Europe urgently needs a 150 billion-euro ($166 billion) bailout fund to recapitalize its beleaguered banks, particularly those in Italy, Deutsche Bank AG’s chief economist said in an interview with Welt am Sonntag.
“Europe is extremely sick and must start dealing with its problems extremely quickly, or else there may be an accident,” Deutsche Bank’s David Folkerts-Landau said, according to the newspaper. “I’m no doomsday prophet, I am a realist.”
With Italian banks weighed down by 360 billion euros of soured loans, the government has been sounding out regulators on ways to shore up lenders amid a renewed selloff after Britain voted to leave the European Union. Lorenzo Bini Smaghi, a former member of the European Central Bank’s executive board who now chairs Societe Generale SA, said Wednesday that Italy’s banking crisis could spread to the rest of Europe and rules limiting state aid to lenders should be reconsidered to prevent greater upheaval.
BlackRock Inc. Vice Chairman Philipp Hildebrand said earlier this month the European Commission should allow governments to take temporary equity stakes in their banks, similar to what the U.S. did with its Troubled Asset Relief Program during the 2008 crisis.
Full article: EU Banks Need $166 Billion, Deutsche Bank Economist Tells Welt (BloombergBusiness)