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Updated 15:06 11/05/21

The world’s most dangerous bank

By Duncan Richardson, News Editor

07 Jul 2016

Deutsche Bank is Europe’s largest bank and according to the International Monetary Fund (IMF) the world’s most dangerous bank. If Deutsche Bank fails it has the potential to collapse the global financial system. So should we be worried?

Deutsche Bank’s share price has collapsed by over 50% in the last 12 months and now trades at 30 year lows. In simplest terms you can value a banks worth by measuring the difference between the bank’s assets and its liabilities. This currently stands at 60bn euros which is not a lot when you consider the sheer size of Deutsche Bank loan book. More worryingly the German Bank has a notional derivatives exposure of $72.8 trillion, or 13% of the total global amount.

Deutsche Bank is not the only Bank in trouble. Italian banks have come under considerable pressure with many losing over 30% of share price in the last month alone. Italian Banks are seen as the weakest link in the European banking chain.

UK listed banking shares are also plummeting with Barclays, Santander and Royal Bank of Scotland nearing their 2008 lows. Are these signs we are on the cusp of another financial crisis?

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