Deutsche Bank and Commerzbank shares crash

European bank stocks are losing massively in value, and Deutsche Bank and Commerzbank are particularly affected. The rise in the price of hedges against payment defaults is particularly striking, further increasing nervousness among bank investors. Deutsche Bank shares have fallen by 30 percent since the start of the banking crisis, representing a loss of seven billion euros in stock market value. According to traders, the rapid rise in prices for hedges against defaults on bank bonds in particular has caused unease.

Credit default swaps (CDS) are currently trading for more than 200,000 euros to hedge a 10 million euro package of Deutsche Bank bonds, up from 142,000 euros on Wednesday. Despite investors' concerns, financial experts believe Deutsche Bank is resilient. They emphasize the bank's robust equity and liquidity positions, writing, "To be clear, Deutsche Bank is not the next Credit Suisse."

Commerzbank shares have also been hit by the crisis of confidence, falling by about four billion euros to 10.8 billion euros. Deutsche Bank's quasi-equity (AT1) bond prices also slipped, pushing the yield to 24 percent, double the level of two weeks ago. Bank quasi-equity bonds have been under pressure since Credit Suisse was forced to write down 16 billion Swiss francs worth of AT1 debt to zero as part of its takeover by UBS.

Despite the turmoil, Deutsche Bank announced May 24 it will redeem $1.5 billion of subordinated bonds ahead of their 2028 maturity. The institution will redeem these so-called Tier 2 bonds at 100 percent of their face value with interest accrued to the redemption date. It remains to be seen, however, whether the banks' actions will be enough to regain investor confidence and offset the losses of recent weeks. Translated with www.DeepL.com/Translator (free version)