Yahoo Finance Deutsche Bank’s CEO Moves Quickly to Pacify Investors
What Will Keep Deutsche Bank from Becoming another Lehman?
John Cryan issued a memo to soothe investors after shares crashed
After the sharp fall in Deutsche Bank (DB) shares on Monday, February 8, 2016, John Cryan, the company’s CEO (chief executive officer) came forward to reassure investors in a memo that the bank is “rock-solid.” Late on Monday, Cryan said the company has sufficient reserves to make payments on its AT1 (additional Tier 1) securities that are due this year.
“The market also expressed some concern about the adequacy of our legal provisions but I don’t share that concern,” Cryan continued in the memo. “We will almost certainly have to add to our legal provisions this year but this is already accounted for in our financial plan.” Cryan seemed concerned about the bank’s vulnerability to global weakness but attempted to calm employees, clients, and investors after shares of the bank crashed nearly 10% on worries of the bank’s insolvency.
Cryan went on to talk about the bank’s high legal expenses and said it’s already been accounted for in the financial plan. He pacified investors by saying, “The market also expressed some concern about the adequacy of our legal provisions but I don’t share that concern.”
Banks in Europe have been battered by strict regulations and worries of a slowing global economy. Compared to US banks (XLF), European banks are facing larger long-term exposure to energy loans and have been hit hard by the steep fall in oil prices. European banks (EUFN) such as Barclays (BCS), BNP Paribas (BNP), Royal Bank of Scotland (RBS), and Standard Chartered (STAN) have declared energy exposure worth nearly $150 billion, much of which is yet to be drawn down.
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