WOULD the collapse of the German banking giant be another Lehman moment for the global banking sector?
The dramatic collapse of Lehman Brothers eight years ago this month was a defining moment of the devastating financial crisis.
Eight years on, Deutsche Bank’s shares fell to an all-time low today amid fears that it cannot afford to pay a huge fine from the US.
What happens if Deutsche Bank collapses?
Phoenix Capital Research, an investment research firm based in Washington DC, believes that the trouble at Deutsche Bank signals a banking crisis in the EU.
Phoenix said: “DB is the proverbial ‘canary in the coalmine’ for Europe.
“Perched atop one of the largest derivatives books in Europe, DB has ties to most major financial institutions in the region.”
“Which is why as soon as DB starts nose-diving, you know something big is up.”
The investment research firm said that the bank’s shares fell by nearly 20% over about two weeks between Friday September 9 and Monday September 26.
It also noted that Deutsche Bank is “considerably” larger than Lehman Brothers and its long-term stock chart painted a “disturbing” picture.
“We believe the global markets are on the verge of another Crisis. 2008 was Round 1. This next round, Round 2, will be even worse,” it said.
Allianz Global Investors chief investment officer Andreas Utermann has said the German government would have to bail out Deutsche Bank if the situation gets bad enough.
“I don’t buy at all what’s coming out of Germany in terms of Germany not wanting to step in ultimately if Deutsche Bank was really in trouble,” he told Bloomberg.
Full article: Financial CRISIS: Will Deutsche Bank collapse be WORSE than Lehman Brothers in 2008? (Express)