Deutsche Bank on the Path to Recovery

The stock of Deutsche Bank edged higher for three straight sessions on Wednesday as market players discounted rumors of an early slowdown of the bond-buying program of the European Central Bank and as litigation woes for the multinational bank eased after two reports from Germany.

The shares of the global lender edged higher by over 2.5 percent during early trading hours in Frankfurt, and traded at approximately €12.38—the highest since the 16th of September. The company’s shares have increased by almost 18 percent since reaching an all-time low of 10.55 during the latter part of the previous week. However, as the trading session progressed, the stock inched lower to €12.19.

Other bank shares around the European region were also rallying on Thursday as markets discounted the report of Bloomberg yesterday that the European Central Bank may start slowing the pace of the monthly bond-buying program amounting to $90 billion when the quantitative easing program is scheduled to be terminated in the month of March next year. The Stoxx Europe 600 banking sector index climbed by approximately 1 percent and reached 144.40—the highest level since the 9th of September.

The denials from the European Central Bank, together with consistently low inflation in the currency, seemed to have countered the initial reaction of the market. However, this is not before a disturbing increase in government bond yields and weaker bank equity prices affected markets throughout the session yesterday. Market participants will be able to evaluate any level of tapering potential when the European Central Bank reports accounts of the meeting held on September 8 today.

The stock of Deutsche Bank most probably have been further strengthened by a news report, which implied that BaFin—the financial market regulator of Germany—would not be pushing through with its probe into the alleged money laundering in Russia.

According to reliable sources, investigators at BaFin were not able to find evidence that the multinational bank aided clients in breaching Russia’s financial sanctions during its military tussle with Ukraine back in 2014. The regional daily newspaper of Germany called Sueddeutsche Zeitung also reported that the investigation by BaFin was likely to be finalized in the coming weeks.

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