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Italians Are Not The Only Ones

29 January 2016 by lberuti

In the world of Financials, last week and this one were mostly about non-performing loans at Italian banks and fears that the ECB would request further heavy provisions. But Italian banks were not the only ones to be under pressure. The above Grapple shows that the 5 year risk premium of DB ( Deutsche Bank AG ) experienced its most torrid ride of the last 3 years over the last couple of weeks, going from 100bps to 143bps. Ahead of the release of their results on Thursday, the fear of higher tail risk at the German bank pushed it wider as investors cannot take comfort from capital ratios that they consider a bit stretched. When they were published, the results did not really alleviate people’s worry as they shown a lack of profitability, with a noticeably underperforming investment banking division and a still heavy burden from litigations (CDS Antitrust among others).