Deutsche Bank closed out the week as one of the
biggest losers in Europe's stock market for reasons both specific
and general. First, DB surprised investors with a
decision to buy back one of its riskier bonds called
a tier two bond. In a normal market,
investors would read that move as a sign of strength
except that very little feels normal right now following the
shutdowns of three regional US banks and credit suisse's force
sale to yes, that led to the wipe out
of certain credit suisse debt that is actually less risky
than tier two bonds. Now, most analysts stress
that DB is a world away from credit suisse when
it comes to risk, but nervous investors seem to
be trying to get ahead of any new meltdown real
or imagined at least one market watcher says that a
driver is fear however irrational that D B's redemption of
its bonds could be seen as a sign of erosion
or shortfall in its capital and insufficient capital is the
number one concern among depositors and investors. It's why
many have been rushing to move money out of smaller
banks and their stocks. The bigger reason DV Stock
is selling off. Investors are increasingly positioning for a
recession which means reducing their holdings in economically sensitive companies
like banks and loading up on safer sectors like food
and or pharmaceuticals, banks including DB look more vulnerable
to some because they're directly exposed to corporate lending.
Right? When more loans are likely to go bad
when you put the two reasons together, it may
not matter much that Germany's Chancellor spoke out to publicly
back Deutsche Bank until things settle down in the financial
sector to the market efforts to show confidence can come
off as signs of weakness instead.