Deutsche Bank’s Real-Time Stress Test
it has yet to pay for its other significant outstanding legal case, relating to “mirror trades” in Russia, in which around ten billion dollars were spirited out of Russia between 2011 and 2015, using simultaneous stock transactions in Moscow and London.
.. If it emerged that, Deutsche Bank had in fact executed mirror trades with parties on the U.S. Sanctions list relating to Russia’s actions in Ukraine, then the fine could be large. (BNP Paribas was fined nearly nine billion dollars for breaking sanctions in 2014.) This outcome, Schenck told investors, would be “nicht lustig”: not funny.
.. If, after a Brobdingnagian fine for mortgage-backed securities, Deutsche Bank also faces a huge settlement for mirror trades, the bank may need to recapitalize with German government money. As I wrote in August, this prospect should frighten even those who derive pleasure from seeing the bank, and its freewheeling culture, effectively policed:
.. Deutsche Bank, it said, was not only “one of the most important net contributors to systemic risks in the global banking system”; it was also a contagious agent, because of heavy financial “spillover” between Deutsche Bank and other lenders and insurers. Any kind of failure at Deutsche Bank, the I.M.F. suggested, would be extremely bad news for everybody.
.. Deutsche Bank shares were down seven per cent on the London Stock Exchange, to 12.16 euros, slightly more than the bank’s all-time low, which occurred after the Brexit vote. That left Deutsche Bank’s market capitalization at 16.77 billion euros, or about $18.6 billion—$4.6 billion more than the proposed R.M.B.S. fine.