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BANKING

Deutsche Bank failure may bring down European banking system

Deutsche Bank failure may bring down European banking system

Angela Merkel is not expected to bail out the bank

IFM Correspondent

December 21, 2016: A senior financial analyst has claimed that if Deutsche bank is allowed to fail it may bring down the entire European banking system. Ewen Cameron Watt, a senior director at investment managers Blackrock Investment Institute, told CNBC: “If Deutsche Bank doesn't make it, forget European banks as a whole.”

The analyst added that the bank has got through a lot of harder stuff but there are still many mountains ahead. “John Cryan, chief executive officer, Deutsche bank, is trying to lead a very long march back to a sustainable model,” he said.

Germany’s largest lender has been facing a tough time. It has a fine of $14billion from the US Department of Justice for misselling of residential mortgage-backed securities in the run-up to the 2008 financial crisis.

A settlement between the German bank and the US department regarding the fine is expected to reach this week.

Apart from fine, there are several regulatory issues that the bank is facing. Though German Chancellor Angela Merkel can step in and bail out the bank, reports suggest she is against the move ahead of elections. Merkel has been at the receiving end because of her open-door migrant policy. 


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