Deutsche Bank (DB) Stock Sinks to New Low After Merkel Rules Out Rescue
Shares of Deutsche Bank were trading down -0.39 or -3.29 percent to $11.46 per share in Tuesday’s premarket, a level not seen in two decades. The selloff occurred after German Chancellor Merkel declined to say whether Germany’s largest bank warranted government help. Deutsche Bank stock closed at $11.85 per share, down -0.90 or -7.06 percent in Monday’s regular trading session.
Founded in 1870, Frankfurt, Germany based Deutsche Bank AG is a worldwide financial services and banking corporation operating in more than 70 countries and employing over 100,000 people globally.
Yesterday’s and this morning’s selloff in the bank’s shares were triggered by an article in German magazine Focus, which reported that the German government had ruled out providing government aid to bail out the beleaguered bank.
In response to a reporter’s question, Chancellor Merkel said that, “The only thing I want to say is that Deutsche Bank is part of the German banking and financial sector and that of course we wish that all companies, also if they’re having temporary difficulties, can develop well”. Hans Michelbach, a member of Merkel’s party and lawmaker for her government stated that, “It’s unimaginable that we would help Deutsche Bank with taxpayers’ money, it would lead to a public outcry. The political establishment would lose credibility if the government jumped in.”
On Monday, a spokesman for the bank said that its Chief Executive Officer, John Cryan had at “no point” asked Chancellor Merkel for assistance with the U.S. Justice Department issue. The spokesman added that “Deutsche Bank is determined to meet the challenges on its own.” Last week, the bank said that it would not pay the $14 billion originally asked for by the U.S. Justice Department.
Deutsche Bank stock has lost over 50 percent of its value so far this year. The bank’s shares are trading at a level not seen in more than twenty years. Investors are convinced that the bank will need to raise money by issuing additional equity, which it will clearly have to do in the event the German government fails to intervene, which appears to be the case at this point.
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