Tuesday, October 11, 2016

Deutsche Bank Tells Investors Not To Worry
About Its €46 Trillion In Derivatives
Deutsche has one of the world’s largest notional derivatives books — its portfolio of financial contracts based on the value of other assets. As we first noted in 2013, It peaked at over $75 trillion, about 20 times German GDP, but had shrunk to around $46 trillion by the end of last year. That’s around 12% of the total notional value of derivatives outstanding worldwide ($384 trillion), according to the Bank for International Settlements. It was €46 trillion as of Q2 measured by notional outstanding .. The bank's net exposure to derivatives was far lower, at around €41 billion .. Zero Hedge: "Why is Europe, and its biggest bank, "keen" on retaining the existing model-based framework which would not require substantial capital increases for risky banks, of which Deutsche Bank is at the very top? Simple: the largest German lender is already notably undercapitalized, and any further capital needs would only lead to further pressure on its stock, forcing it to seel even more equity when the inevitable capital raising moment arrives; it also means that the models used by DB's risk managers are likely to materially misrepresent the bank's true value at risk, not only when it comes to its loan book, and especially Level II and III assets, but more importantly, its derivative book, where while we appreciate Mr. Lewis' assertion that the bank's €46 trillion in gross notional derivatives collapse to just €41 billion, we would be far more interested in seeing the math and assumptions behind this calculation."
LINK HERE to the article

No comments: