Deutsche Bank is losing its trust every hour

One time our kindergarten teacher told us not to fight. That it would be better if we stayed friends. We took it to our hearts. It lasted about a week. Then we couldn’t see each other for a couple of weeks, because in our friendly mood we infected each other with smallpox.

So all of us in Europe stood by one another’s side, we planned the bank union in which the banks will be helping one another and they will be even more entwined than they were before, so from all this friendliness and capital cohesion German Deutsche Bank started to spread the infection on stock markets.

Its stocks briefly peeked under the level of 10 EUR on Friday before the weekend’s trade interruption. First time in history was the stocks’ value in single figures. Investors are one after the other realizing that the biggest German bank won’t be able to pay the fine to American authorities for the manipulations with mortgage papers amounting to 14 bn. dollars. The market capitalization, which could be simply translated as the “value of bank”, is only 3 bn. dollars higher then said fine.

Deutsche Bank is losing its trust every hour. Moreover, some hedge funds are starting to take their hands off the bank and starting to move the capital. Loss of trust is for bank house worse than fire, flood, and hurricane together. Deutsche Bank can soon suffer the same fate as Lehman Brothers bank. The fall of Lehman Brothers was what started the crisis. The analogy is more than obvious. Even other macroeconomic indicators are showing that European economy is slowing down and it’s evolving same as it did back then.

The German government loudly refused again to financially help the bank in case it will be needed. It doesn’t want to get tangled in the mess which Deutsche Bank got into on the derivatives market. Watch out – this message has to be read accordingly. “Helping the bank” is not the same as “protection of deposits”. The German government can decide to let the bank fall but I can hardly imagine that it wouldn’t find enough money to save the deposits in case they would be missing in the deposits insurance fund. This rhetorical exercise can be difficult to read for depositors. It is possible that the clients of the bank might not stay calm. Well, diplomatically said.