Deutsche Bank Wins Leverage Contest

Deutsche Bank No. 1 in Europe as Leverage Hits Valuation

Deutsche Bank AG (DBK), adding assets as other lenders trim their balance sheets, leapfrogged France’s BNP Paribas SA (BNP) to reclaim the title of Europe’s largest bank.

Assets at the Frankfurt-based company rose 14 percent to 2.16 trillion euros ($2.88 trillion) in 2011, making it the largest publicly traded bank in Europe for the first time in five years, according to data compiled by Bloomberg.

Chief Executive Officer Josef Ackermann, who has called proposals to limit bank size “misguided,” will leave behind a balance sheet about 40 percent larger than in 2006, and more than 80 percent as big as Germany’s economy, when he steps down in May.

The firm is the second-most leveraged and third-least capitalized of Europe’s 10 largest banks, even after Ackermann boosted reserves and trimmed dependence on borrowed money.

Shares (DBK) trade at a price-to-book ratio of 0.65, implying that investors don’t believe the bank’s assets are worth as much as the company says. Deutsche Bank’s ratio is the seventh lowest among the 50 global banks with the closest market value, data compiled by Bloomberg show.

My view:

Another too big to fail bank is getting bigger still.

It seems that few if any of the big bank CEOs have learned a thing from the financial crisis.

The implicit government guarantee has become explicit as the taxpayers in every advanced economy are regarded as muppets.

How long will taxpayers continue to support the ponzi scheme known as central banking, fractional reserve lending and socialism/fascism?

When will they insist on a return to the sound money system of gold?

What is it going to take for the populace to see that the psychopaths operating in government and large corporations are destroying their future?

Comments

  1. What is it going to take for the populace to see that the psychopaths operating in government and large corporations are destroying their future?

    Complete economic collapse. Twice. That should do it.

    Regards,

    John

    ReplyDelete
  2. My fear is that you are correct John.

    Nearly everyone I speak to about these weighty matters shrug their shoulders and amble off with hardly a care in the world.

    The second collapse should wake them from their slumber.

    But what will be the cost of their presently sleepiness?

    ReplyDelete
  3. But what will be the cost of their presently sleepiness?
    Err, pretty much everything I would think, PW.

    ReplyDelete
  4. Does anyone publish a list of European banks by leverage ratio?

    ReplyDelete
  5. It is difficult to find an up to date list of European banks by leverage ratio.
    Probably your best approach would be to search the particular bank you are concerned about individually and examine its ratio.
    Here is a link to a list of the world's largest banks by market capitalization: http://www.relbanks.com/worlds-top-banks/market-capitalization-2011
    There is a link for banks in Europe at the top of the page.
    Here is a link to Bloomberg where you can calculate the leverage ratio yourself using the reported financials.
    The link is for BNP Paribas, a large French bank with a leverage ratio I calculate at 22:1 (very high).
    http://www.bloomberg.com/quote/BNP:FP/balance-sheet

    ReplyDelete

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