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Deutsche Bank's Derivatives Exposure

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http://www.zerohedge.com/news/2014-04-28/elephant-room-deutsche-banks-75-trillion-derivatives-20-times-greater-german-gdp

 

The Elephant In The Room: Deutsche Bank's $75 Trillion In Derivatives Is 20 Times Greater Than German GDP

 

.....the good news.... is that through the magic of netting, this number collapses to €504.6 billion in positive market value exposure (assets), and €483.4 billion in negative market value exposure (liabilities).....

 

.... this accounting gimmick works in theory, however in practice the theory falls apart the second there is discontinuity in the collateral chain ..... and not only does the €21.2 billion number promptly cease to represent anything real, but the netted derivative exposure even promptlier become the gross number, somewhere north of $75 trillion.

 

......this epic derivative exposure is the primary reason why Germany .... has done everything in its power .... to make sure there is no domino-like collapse of European banks, which would most certainly precipitate just the kind of collateral chain breakage and net-to-gross conversion .....

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When I clicked on the link, I got a phishing warning from my anti-virus software which I ignored as I can't believe zerohedge would do that sort of thing. Maybe the CIA/ DHS / CGHQ / NSA goons don't approve of people reading this article. Also, the software of this website would not allow me to post the zerohedge url so I had to resort to using tinyurl. This was the zerohedge url that I was trying to post (I've put a gap in the full url to circumvent the restrictions)

http://www [dot] zerohedge.com/news/2014-07-22/ny-fed-slams-deutsche-bank-and-its-€55-trillion-derivatives-accuses-it-significant-o

There's nothing wrong with the url as far as I have been able to ascertain

 

 

http://tinyurl.com/n482qhq

 

NY Fed Slams Deutsche Bank (And Its €55 Trillion In Derivatives): Accuses It Of "Significant Operational Risk"

 

First it was French BNP that was punished with a $9 billion legal fee after France refused to cancel the Mistral warship shipment to Russia (which promptly led to French National Bank head Christian Noyer to warn that the days of the USD as a reserve currency are numbered), and now moments ago, none other than the 150x-levered NY Fed tapped Angela Merkel on the shoulder with a polite reminder to vote "Yes" on the next, "Level-3" round of Russia sanctions when it revealed, via the WSJ, that "Deutsche Bank's giant U.S. operations suffer from a litany of serious problems, including shoddy financial reporting, inadequate auditing and oversight and weak technology systems."

 

What could possibly go wrong? Well... this. Recall that as we have shown for two years in a row, Deutsche has a total derivative exposure that amounts to €55 trillion or just about $75 trillion. That's a trillion with a T, and is about 100 times greater than the €522 billion in deposits the bank has. It is also 5x greater than the GDP of Europe and more or less the same as the GDP of... the world.

 

..... what this ... means is that confidence in Europe's insolvent banks just crashed with a bang once again, not that it would be reflected in the stock's rigged price of course: rigged most likely by Deutsche Bank among other of course.....

 

As for Deutsche Bank's response perhaps the simplest and most effective one would be for the Frankfurt megabank to tell the NY Fed that perhaps its own 150x leverage is just a little more worthy of attention.

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"The Elephant In The Room: Deutsche Bank's $75 Trillion In Derivatives Is 20 Times Greater Than German GDP"

Apples versus Oranges - these are very different things !

Derivatives are bets.

If you bet friend A that England will win the World Cup, at 10:1 odds, and then cover the bet off with another opposite bet at better odds, you have just done what DB is doing. It has no bearing on GDP, and is silly to compare the two.

 

The key thing is not the size of the bets, it is the nature of the underlying risk, and how they are managed. Historically DB/BT has been pretty good at managing these risks, not like the cowboys at AIG

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"Deutsche Bank's $75 Trillion In Derivatives Is 20 Times Greater Than German GDP"

It may be true - but it is like comparing apples and oranges.

 

Get this: Derivative Exposures are simply: "the Notional Size of an Exposure" that the derivatives relate to.

It is NOT a loan exposure. If the derivative is defaulted, then the settlement amount will be far smaller.

In fact, there may be a Zero exposure - or even a windfall gain.

 

How many of the idiots writing about this risk have taken time to understand this?

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Did you see what they may be planning to do when a 2big2fail is about to go under?

http://www.greenenergyinvestors.com/index.php?showtopic=7563&page=2&do=findComment&comment=305269

 

I subscribe to ...“The UK Column” .... Within the newspaper were a number of articles one was entitled “New Rules For Financial Carnage” and talks more about what is proposed by the Financial Times article above, about new rules designed to protect global systematically important institutions..... The new rules follow a “war game” which took place on October 13, 2014 at the offices of the Federal Deposit Insurance Corporation in Arlington, Virginia. Present were the FDIC and Bank of England staff, along with “top financial brass” from the US and UK treasuries. The war game was the first of its kind and designed to test how they would react to another financial crash of the scale of 2008. The new rules oblige banks to wait up to 48 hours before requiring settlement of derivatives contracts from a failing bank. This delay will be used to give regulators time to transfer asset from the failing bank, as well as obligations to a “bridge company”, negating the need to unwind derivatives contracts. ... George Osborne said “We want to make sure we are able to handle an institution that previously would have been too big to fail … We are confident in this framework, but we are testing it.”

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New York Times - ‎1 hour ago‎

 

Deutsche Bank reported a loss on Wednesday as it set aside more money to cover costs stemming from accusations of wrongdoing by its employees.

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http://www.businessweek.com/news/2014-11-17/deutsche-bank-exits-most-single-name-credit-default-swap-trading

 

Deutsche Bank Scales Back Trading in Credit Derivatives

 

Deutsche Bank AG will stop trading most credit-default swaps tied to individual companies...

 

The bank is exiting part of the market as trading linked to swaps protecting against the default of individual companies plunged from as much as $32 trillion before the financial crisis to less than $11 trillion....

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http://www.zerohedge.com/news/2014-04-28/elephant-room-deutsche-banks-75-trillion-derivatives-20-times-greater-german-gdp

 

The Elephant In The Room: Deutsche Bank's $75 Trillion In Derivatives Is 20 Times Greater Than German GDP

 

.....the good news.... is that through the magic of netting, this number collapses to €504.6 billion in positive market value exposure (assets), and €483.4 billion in negative market value exposure (liabilities).....

 

.... this accounting gimmick works in theory, however in practice the theory falls apart the second there is discontinuity in the collateral chain ..... and not only does the €21.2 billion number promptly cease to represent anything real, but the netted derivative exposure even promptlier become the gross number, somewhere north of $75 trillion.

 

......this epic derivative exposure is the primary reason why Germany .... has done everything in its power .... to make sure there is no domino-like collapse of European banks, which would most certainly precipitate just the kind of collateral chain breakage and net-to-gross conversion .....

 

Apples and oranges

 

If I make a bet about the size of German GDP - it is not the same as actually generating GDP revenues

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The Deutsche Bank "relief rally" may be ending

 

DB ... 3-yrs : update : 10-d

DBK_zpsiaxpx96t.gif

 

If it turns lower next week, we may see a retest of the recent high volume low (at $11.19)... or worse

The Fall of Deutsche Bank. Prepare Yourself Accordingly.

Published on 7 Oct 2016

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(If you have any money in DB - or their ETF's - better get it out quickly):

 

"It Cannot Be Allowed To Fail":

Germany Pursuing "Discrete Talks" With The US Over Deutsche Bank

http://in.reuters.com/article/germany-deutsche-bank-politics-idINKCN1252AL

http://www.zerohedge.com/news/2016-10-05/it-cannot-be-allowed-fail-germany-pursuing-discrete-talks-us-over-deutsche-bank

 

The German government is pursuing discreet talks with U.S. authorities to help Deutsche Bank (DBKGn.DE) secure a swift settlement over the sale of toxic mortgage bonds, according to sources in Berlin.

Until now, German officials have played down their role in the standoff, saying it is up to Deutsche to work out a deal with the U.S. Department of Justice (DOJ), which is demanding up to $14 billion to settle claims the lender mis-sold mortgage-backed securities before the financial crisis.

But government officials in Berlin, speaking on condition of anonymity, told Reuters they hoped to facilitate a quick deal that would buy Deutsche Bank time to regain its footing.

One senior government official told Reuters there was "contact at all levels" between German and American officials.

. . .

Another option is merging Deutsche with a European rival, but "only if Germans controlled the combined entity."

Meanwhile the political posturing over a potential DB bailout continues: comments on Sunday from Economy Minister Sigmar Gabriel, a Social Democrat, accusing Deutsche of making speculation its business, were a signal that Merkel's opponents will not hesitate to use the Deutsche issue to score political points.

"The German government would face stiff opposition if it decided to help Deutsche Bank," said Joerg Rocholl, president of the ESMT business school in Berlin and member of an economic advisory board to the German finance ministry. "I would expect opposition parties to seize on this in a massive way to question the credibility of the government in the run-up to the federal election next year," he added.

The German public is likewise against a rescue: in an Emnid survey for Focus magazine on Saturday, 69 percent of those polled opposed state aid for the bank, with 24 percent in favour. Lawmakers in Merkel's Christian Democrats (CDU) have said they do not want to see the government jump to Deutsche's aid.

===

 

There are various ways this can play out.

But given the unpopularity of a rescue, a big loss for shareholders, and maybe some haircut for depositors seems likely

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Deutsche Bank employees leave New York office with white envelopes and their belongings after the investment bank cuts 18,000 jobs across the world and causes shares to plunge more than five percent

Deutsche Bank has started laying off staff in New York after the German investment bank began implementing 18,000 job cuts across the globe, prompting shares to plunge more than five percent.

The bank sacked workers in New York, Sydney, Hong Kong and London on Monday morning as it launched one of the biggest overhauls to an investment bank since the aftermath of the financial crisis.

It is not yet clear how many jobs in the U.S. have been cut but employees were spotted leaving the Wall Street office on Monday with large white envelopes after being summoned to the cafeteria to learn their fate.

Hundreds of staff in New York were informed during the meetings that their positions were being cut and they received details of their redundancy packages, sources said.

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Do they LOOK at Charts (the people who write articles) ?

3j7Q1vm.png

Does this look like the chart of a company about to go bust?

Maybe the job cuts are needed and wil allow DB to survive

/ 2 /

Burack: Deutsche Bank Is Desperately Trying To Save Itself!

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