Shares of Germany’s (NYSE: DB) reached an all-time low on Monday’s trading session.
Company officials are dealing with a fresh wave of doubt from investors about the struggling investment bank as well as how it’s going to move forward, triggering another sell-off wave as further concern about potential money laundering issues continue to grow.
Weeks after merger talks with Commerzbank AG failed to move ahead, shares for the German bank have now reached a new bottom, having fallen 39 percent over the course of the year. German officials have worried over Deutsche’s struggle to compete on its own after battling to halt compliance failures and high costs.
A number of analysts have gone on to downgrade the company’s stock, citing a lack of strategic options for the future and that the investment bank has been losing revenues at a startling pace. “We downgrade to sell because we don’t expect operating conditions to improve anytime soon. Deutsche remains a levered market play vulnerable to external events and rising rates are currently a distant hope,” UBS analysts said in a research note. “With the share price at close to all-time lows, spreads and CDS (credit default swaps) stubbornly high and profitability depressed, the urgency to act is high we think.”
A significant portion of the investment bank’s income is fueled by trading revenue, with around 52 percent of the company’s total net revenues in 2018 came from trading.
However, this figure has been in steady decline over the past few years. While company officials stressed that Deutsche Bank has still regained some revenue-based market share in the areas of IPO’s, leveraged buyouts and corporate mergers, it still has failed to address other concerns raised by investors and regulators.
Even worse for the company are a number of concerns floating around about legal liabilities concerning money-laundering scandals the firm has been involved with. Specifically, Deutsche Bank employees just recently reported supposedly suspicious activity from President Trump’s and Jared Kushner’s bank accounts, triggering a fresh wave of investor anxiety.
Shares of Deutsche Bank fell by around 3 percent on German exchanges today, while the investment bank fell by 2 percent on the NYSE. Over the past five years, shares of the company have fallen from almost $40 per share down to their current price of $7.43 on the American exchange.
At this point, it seems unlikely that the company will stage a turnaround after failing to secure what was seen as a much-needed merger with Commerzbank. At the same time, the bank, with a market cap of close to $16 billion on the NYSE, isn’t volatile enough for traders to profit significantly from any price moves.
Deutsche Bank Company Profile
Deutsche Bank, Germany’s leading private bank, has a strong presence in Europe, America, and Asia-Pacific.
The bank has its roots in Germany, where 30% of total banking revenue is driven. With its ongoing business restructuring program, the bank is looking to reduce its corporate and investment bank business, as well as focus more on its European business while reducing its presence in USA and Asia.
Its asset management business, DWS, was IPO’d in March 2018. Deutsche appointed Christian Sewing as new CEO in April 2018. – Warrior Trading News