No crisis at Deutsche Bank, really, I swear.
By Wolf Richter of WOLF STREET
When Stuart Lewis, Chief Risk Officer at Deutsche bank, was asked in an interview, published in the Frankfurter Allgemeine on Sunday, if his institution is “the most dangerous bank in the world” – a reference to the IMF’s call that among globally systemically important banks, “Deutsche Bank appears to be the most important net contributor to systemic risks” – he replied:
“No, not at all. Only one IMF report has recently muddled up the situation: We are not dangerous. We are very relevant. Deutsche Bank is interwoven with the entire financial sector. We are one of the largest universal banks in the world. But to make it clear: Our house is stable. The balance sheet is healthy.”
Could he say that “in good conscience?”
“Absolutely. Look at how we have capitalized the bank since the Financial Crisis. We have taken €115 billion in risks off the balance sheet and have €220 billion of liquidity. Concern for us is unfounded.”
Alas, the European Banking Authority released the stress test results on Friday. Deutsche Bank didn’t fail in part because there was no way to fail. No bank could fail, not even Italy’s Banca Monte dei Paschi di Siena which is in full collapse-and-bailout mode at this moment. Mercifully, no bank could fail the test by design…ç