Deutsche Bank’s share price sank to a record low today on bailout concerns
Shares in Deutsche Bank have dropped by over six per cent in today's trading, to a record low of €10.67, and analysts have warned that the bank could even descend "into the realms of penny stocks".
The stock's dramatic dip – to its lowest level since 1992, according to Bloomberg – may have been prompted by a recent report in Focus magazine that German Chancellor Angela Merkel has ruled out any state assistance for the lender next year.
Deutsche's share price has taken a hammering over the past few months, dropping by around 60 per cent. The lender performed poorly in the recent European Banking Authority stress test and was one of only two banks to fail the US Federal Reserve stress test back in June – and the group recently endured its worst day of trading since the day after the EU referendum when it admitted that the US Department of Justice had slapped it with a $14bn (£11bn) fine.
The fine was related to civil claims in connection with the bank's issuance and underwriting of residential mortgage-backed securities between 2005 and 2007.
Meanwhile, investors did not show much enthusiasm towards Deutcsche's plans to convert billions of dollars of corporate loans into marketable securities, which it announced last week.
"Merkel reportedly ruling out a government bailout of Deutsche Bank couldn’t have come at worse time when it has a $14bn fine from US regulators hanging over its head. DB has one of the worst capital positions of Europe’s “systematically important” banks," said CMC Markets' Jasper Lawler.
"The US regulatory fine has the potential to tip Deutsche over the edge so investors are jumping ship. The German bank’s shares are fast approaching €10. Below €10 would take Deutsche Bank into the realms of penny stocks and could see its shares offloaded en-masse."