Deutsche Bank Isn’t Finished Yet

Despite the fall in share-price and the fines facing the company, Deutsche Bank will not go bankrupt. This statement was made by David Benamou, the chief investment officer of Axiom Alternative Investments. He stated that the fall in stocks wasn’t about survival, but profitability. Axiom Alternative Investments is one of many investors that have short the stock. Benamou made his comments during an interview on CNBC’s Squawk Alley on Friday. He said the bank grew in the 2000s, but their rigid structure prevented them from adapting to regulations in 2008 and they are now paying the price. Axiom went short on the stock in February. “We were sure they would suffer a lot essentially due to the restructuring costs and also litigation.” This litigation could amount to $14 billion, the figure first proposed by the U.S. justice department.

The bank’s share price has lost half its value this year. Its share price had a sharp increase on Friday as news came of a potential agreement with the Department of Justice, for a sum much lower than the earlier declared figure. The bank from the start had been adamant that it would not pay such a huge sum. The fine is in relation to offences committed with mortgage securities. Benamou went on to say that the situation of the bank can be turned around in twelve months, if they begin to “…deliver on the restructuring plan.” Deutsche bank is not the first bank to be hit with mega fines from the DOJ. Goldman Sachs agreed to pay more than $5 billion back in January, while Wells Fargo agreed to $1.2 billion over the same mortgage securities breaches. Deutsche Bank will be the first European bank to settle on this issue, with Barclays, Royal Bank of Scotland, Credit Suisse and UBS also on the chopping block.