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Did China rescue Deutsche Bank?

As we approached the end of September and entered October, the imminent demise of Deutsche Bank was on the lips of many insiders and the MSM alike. Then everything went quiet. And nobody was even commenting on the silence. It intrigued me. Even Zero Hedge went silent at the end of October, which raises who really runs it. Even Parkes’ own website doesn’t carry the story.

Then tonight I was listening to Simon Parkes, who said that the Chinese had purchased 25% of Deutsche Bank. So, I went looking. The only evidence this might have happened that I could find is this article from October 9, 2016, raising the possibility that China could take this step.

And the only thing I can say is SOMETHING has happened to save its skin, at least in the short term.

But the silence is deafening.

Richard

Check out the extraordinary new, life-changing technology at www.magravsplasmaproducts.com

Deutsche Bank: Europe’s Ticking Time Bomb

Once again, James Corbett calls it like it is:

You have no doubt heard by now about the precarious situation that Deutsche Bank finds itself in, including the impending US government fine for selling faulty mortgage-backed securities in the run up to the financial crisis. The lamestream media is busy running stories about German bailout rumors, and bank’s uncanny ability to not quite die…yet. But in case anyone is tempted to draw comparisons with the 2008 financial crisis, rest assured that the failure of Deutsche Bank would be no “Lehman Bros. moment.” It would be incomparably worse.

Deutsche Bank is not just one of the largest banking and financial services companies in the world (although it is that). It is also one of the most inter-connected banks in the world. As the IMF helpfully pointed out earlier this year:

“Deutsche Bank is also a major source of systemic risk in the global financial system. The net contribution to global systemic risk is captured by the difference between the outward spillover to the system from the bank and the inward spillover to the bank from the system based on forecast error variance decomposition. Deutsche Bank appears to the most important net contributor to systemic risks in the global banking system, followed by HSBC and Credit Suisse. Moreover, Deutsche Bank appears to be a key source of outward spillovers to all other G-SIBs as measured by bilateral linkages.”…

…Well, in 2013 its notional derivative exposure was 55.6 trillion euros. Let’s put that in perspective with a graphic from ZeroHedge comparing DB’s derivative exposure to the Gross Domestic Product of Germany.

Does that look frightening? Well, don’t worry. Deutsche’s derivative black hole has been pared back to a much more modest 46 trillion or so euros, a mere 15 times German GDP.

Does that make you feel any better? I didn’t think so.

End of quote.

It’s not if with Deutsche. It’s when.

And the counterparties began to pull their cash out of Deutsche last week.

Not long to go when that starts.

Richard

Check out the extraordinary new, life-changing technology at www.magravsplasmaproducts.com

 

This Is How Much Liquidity Deutsche Bank Has At This Moment, And What Happens Next

Anybody who reads my posts will know I’ve been talking about the impending demise of Deutsche Bank for several months.

I have also been intrigued to watch its demise inexorably align with the Shemitah of this Jubilee year – this weekend. It’s been like watching the death throes of a wild beast; except its thrashing tail could bring down the entire global financial system. I don’t use these words lightly. And you might have seen its parlous state make the MSM in the last 24 hours. Here’s the latest:

It is not solvency, or the lack of capital – a vague, synthetic, and usually quite arbitrary concept, determined by regulators – that kills a bank; it is – as Dick Fuld will tell anyone who bothers to listen – the loss of (access to) liquidity: cold, hard, fungible (something Jon Corzine knew all too well when he commingled and was caught) cash, that pushes a bank into its grave, usually quite rapidly: recall that it took Lehman just a few days for its stock to plunge from the high double digits to zero.

It is also liquidity, or rather concerns about it, that sent Deutsche Bank stock crashing to new all time lows earlier today: after all, the investing world already knew for nearly two weeks that its capitalization is insufficient. As we reported earlier this week, it was a report by Citigroup, among many other, that found how badly undercapitalized the German lender is, noting that DB’s “leverage ratio, at 3.4%, looks even worse relative to the 4.5% company target by 2018” and calculated that while he only models €2.9bn in litigation charges over 2H16-2017 – far less than the $14 billion settlement figure proposed by the DOJ – and includes a successful disposal of a 70% stake in Postbank at end-2017 for 0.4x book he still only reaches a CET 1 ratio of 11.6% by end-2018, meaning the bank would have a Tier 1 capital €3bn shortfall to the company target of 12.5%, and a leverage ratio of 3.9%, resulting in an €8bn shortfall to the target of 4.5%.

When Citi’s note exposing DB’s undercapitalization came out, it had precisely zero impact on the price of DB stock. Why? Because as we said above, capitalization – and solvency – tends to be a largely worthless, pro-forma concept. However, when Bloomberg reported today that select funds have withdrawn “some excess cash and positions held at the lender” the stock immediately plunged: the reason is that this had everything to do with not only DB’s suddenly crashing liquidity, but the pernicious feedback loop, where once a source of liquidity leaves, the departure tends to spook other such sources, leading to an outward bound liquidity cascade. Again: just ask Lehman (and AIG) for the details.

Which then brings us to the $64 trillion (roughly the same amount as DB’s gross notional derivative exposure) question: since DB is suddenly experiencing a sharp “liquidity event”, how much liquidity does Deutsche Bank have access to as of this moment, to offset this event? The answer would allow us to calculate how long DB may have in a worst case scenario if we knew the rate of liquidity outflow.

For the answer, we go to a just released note by Goldman Sachs, which admits that it is now facing “crisis” questions from clients, among which “can a large European bank face a liquidity event” to wit”

Deutsche Bank stands at the center of the European financial system – it is a major counterpart of all relevant European banks, and broader. Recent reports of potential litigation hits have compounded capital concerns, and raised the overall level of market anxiety. “Crisis” questions are being asked: “is there risk of a financial crisis re-run” and “can a large European bank face a liquidity event”?

So what is the answer: how much liquidity does Deutsche Bank have access to? The answer is two fold, with the first part focusing on central bank, in this case ECB, backstops in both $ and €.

End of quote.

In line with that Chinese proverb; we live in interesting times.

In the light of all of this, you might want to watch Jim Rickards and Egon von Greyerz discuss 10000 gold.

Richard

Check out the extraordinary new, life-changing technology at www.magravsplasmaproducts.com

Deutsche Bank Refuses Delivery Of Physical Gold Upon Demand

I present this Zero Hedge article in full:

While the trading world was focused on the latest news involving Deutsche Bank, namely that the troubled German bank had been contemplating a merger with Germany’s other mega-bank, Commerzbank as part of a strategy to sell all or part of a key business to speed up its flagging overhaul, a more troubling report emerged in a German gold analysis website, according to which Deutsche Bank was unable to satisfy a gold delivery request when asked to do so by a client of Germany’s Xetra-Gold service.

But first, what is Xetra-Gold?

According to its website, the publicly traded company “provides investors with an efficient instrument to participate in the performance of the gold market. Xetra-Gold’s combination of features – cost-efficient trading and the right for physical delivery of gold – makes it an attractive product.”

Among its highlights, Xetra-Gold lists the following:

Cost-efficient trading: No mark-up fee, no transportation or insurance costs such as those incurred when purchasing physical gold. Only the standard transaction fees that are charged for on-exchange securities trading are payable at the time of acquisition. The spreads that apply to purchase and sale correspond to the standard conditions on the global market and are considerably lower than those for traditional gold-based financial products. Furthermore, management or administration fees relating to Xetra-Gold are not incurred. The investor pays the amount of custody fees which he/she has agreed upon with the depository bank.

Physically backed: The issuer uses the proceeds from the issue of Xetra-Gold to purchase gold. The physical gold is held in custody for the issuer in the Frankfurt vaults of Clearstream Banking AG, a wholly-owned subsidiary of Deutsche Börse AG. In order to facilitate the delivery of physical gold, the issuer holds a further limited amount of gold on an unallocated weight account with Umicore AG & Co. KG.

Transparent:  Xetra-Gold tracks the price of gold on a virtually 1:1 basis, and is always up to date.

Tradeable in euros per gram: While in the past, gold was mainly denominated in US dollars per troy ounce, you trade Xetra-Gold in euros per gram.

Stable/Constant holdings: The investor’s right to receive delivery of the certificated amount of gold is not reduced by management costs or other fees, unlike other investments in gold. 1,000 units of Xetra-Gold will still represent a kilogram of gold in 30 years’ time.

The company makes the following promise:

Redemption for gold: Investors always have the possibility of demanding delivery of the securitised amount of gold per bearer note against the issuer. If the investor is not able to exercise this right due to legal restrictions effective for him/her, he/she can demand the cashing of Xetra-Gold from the issuer. In this case, a settlement fee of EUR 0.02 per Xetra-Gold bond will be charged.

Delivery of gold: If an investor asserts his/her right to the delivery of the certificated volume of gold from the issuer, the gold will be transported to the respective point of delivery by Umicore AG & Co. KG, which is responsible for all physical delivery processes. The issuer will also have delivery rights of gold from Umicore AG & Co. KG, as the gold leaf debtor. Investors can find information on delivery and the alternative payment claims that are relevant for investment and insurance companies in the PDF document entitled ‘Information on the process for exercising Xetra-Gold’.

And yes, Deutsche Bank is involved, as the fund’s Designated Sponsor.

In other words, Xetra-Gold is an Exchange-Traded Commodity which differentiates itself by “representing that every gram of gold purchase electronically is backed by the same amount of physical gold” and its principal bank is none other than Deutsche Bank.

And with Germans recently rushing to buy safes or find sound money alternatives in a country where the interest rate is negative, the ETC, it is not surprising that the population has flocked to its offering.

According to recent report by LeapRate, the gold held in custody by Deutsche Borse Commodities for the purpose of physically backing the Xetra-Gold bond has risen to a new record high of 90.67 tons, an increase of more than 50% since the beginning of the year. “For each Xetra-Gold bond, exactly one gram of gold is deposited in the central vaults for German securities in Frankfurt” the report parrots the company’s website.

Among all exchange-traded commodities (ETCs) tradable on Xetra, Xetra-Gold is by far the most successful in terms of turnover. During the first seven months of the year, order book turnover on Xetra stood at approximately €1.5 billion. The assets managed by Xetra-Gold currently amount to €3.5 billion.

In September 2015, the German Federal Fiscal Court (Bundesfinanzhof) had ruled that after a minimum holding period, any profits from the sale or redemption of Xetra-Gold are not subject to the capital gains tax. From a fiscal point of view, the purchase, redemption or sale are thus to be treated equal to a direct purchase or sale of physical gold, such as in bullions or coins.

But what is most notable, is that, as noted above, Xetra-Gold investors are entitled to the delivery of the certified amount of physical gold at any time, and adds that “since the introduction of Xetra-Gold in 2007, investors have exercised this right 900 times, with a total of 4.5 tons of gold delivered.

However, something appears to have changed.

As Oliver Baron reports, those who ask for gold delivery at this moment, “could encounter difficulties.” The reason is that according to Baron, a reader of GodmodeTrader “sought physical delivery of his holdings of Xetra-Gold. For this he approached, as instructed by the German Borse document, his principal bank, Deutsche Bank.”

At that point then he encountered a big surprise: the Deutsche Bank account executive informed the investor that “the service”, is no longer offered, namely exercising physical delivery at Xetra-Gold, for “reasons of business policy” and therefore the order form provided by Clearstream Banking AG for exercising Xetra-gold is no longer available.

Baron writes that since Deutsche Bank is no longer serving the physical exercising of delivery request of Xetra-Gold is remarkable, as Deutsche Bank is the “designated sponsor” as well as fiscal, principal and redemption agent of Xetra-Gold according to its prospectus, and as the explainer of how to exercise physical delivery also reveals. Even if one is a customer of another bank, Xetra-Gold should – at least on paper- guarantee delivery by way of Deutsche Bank, as the Deutsche Borse Commodities GmbH explains in its “process description for exercising units

Step-by-step description of exercise

Together with a representative of his principal bank, the investor creates the transaction and sends it to the principal bank’s custodian with the relevant process data described above. The custodian in turn instructs its custodian, stipulating all process-relevant data, until a bank which is a customer of Clearstream Banking is authorised.

The customer may use the attached exercise form to instruct the designated sponsor (here Deutsche Bank AG, Frankfurt) to deliver a specified number of gold bars to the point of delivery. The process is similar to that for the delivery of physical certificates.

The customer should send the original exercise form to the following address:

 

Deutsche Bank AG
“Ausübung Xetra-Gold” CIB-Global Banking
Trust & Securities Services
Grosse Gallusstrasse 10 – 14
60311 Frankfurt am Main
Germany

 

To transfer the required amount of Xetra-Gold units to the blocked account of Deutsche Börse Commodities, the customer should also place an FoP instruction via CASCADE or File Transfer/SWIFT.

Delivery will be initiated if Deutsche Bank receives the securities and the application form by 10:00 CET. As a rule it takes one to two weeks to deliver retail gold bars and four days for London Good Delivery gold bars from date of ordering. As soon as the delivered gold arrives at the point of delivery, the Xetra-Gold® units are removed and recovered from the “Ausübungskonto DBCo” (DBCo exercise account).

Due to the provisions of the Money Laundering Act (Geldwäschegesetz) only the branch of a bank may be used as point of delivery. Investors expecting a large delivery of gold should contact their principal bank to discuss the transfer of the gold to the point of delivery.

The article goes on to note that it was not clear whether the exercise and physical delivery at other banks is actually still possible. Baron said that Deutsche Borse Commodities advised to transfer the Xetra-Gold shares in a cooperative/Raiffeisenbank since physical delivery is allegedly still possible here. The Deutsche Borse also announced that it is currently working on the “possibility of delivery regardless of bank branch.” However, since this process was not described in the prospectus of Xetra-Gold, it would have to be legally tested, which could take considerable time.

The article’s conclusion: anyone who wants to easily convert their Xetra-Gold holdings into physical gold – at least for clients of Deutsche Bank – can do so only by selling their shares, and then buying gold coins or bars directly elsewhere. Which leads the author to the logical question: what is the worth of the Xetra-Gold service, which certifies the right to redeem physical gold, if said delivery is no longer possible?

In other words, what was supposedly an ETC which promised physical delivery upon demand, is nothing more than yet another “paper only” play.

We, on the other hand, have a more focused question: is the inability to deliver physical gold an incipient issue with Xetra-Gold, or with the company’s “designated sponor” Deutsche Bank, and if the latter is suddenly unable to satisfy even the smallest of delivery requests by retail clients, just how unprecedented is the global physical gold shortage?

End of quote.

Is this the thin end of a very large wedge?

Richard

Check out the extraordinary new, life-changing technology at www.magravsplasmaproducts.com

Deutsche Bank CEO Warns Of “Fatal Consequences” For Savers

I find this Zero Hedge article of great interest:

So, in what may have been DB’s loudest cry for help against the ECB’s unwavering commitment to rock-bottom interest rates, the bank’s CEO, John Cryan, warned in a guest commentary ahead of the Handelsblatt Banking Summit titled, appropriately enough “Banks in Upheaval”, to be held in Frankfurt on August 31 and September 1, that “monetary policy is now running counter to the aims of strengthening the economy and making the European banking system safer.

However, his most striking warning was not aimed at Mario Draghi, but at Germany itself – and ostensibly his own clients – implicitly suggesting that if Deutsche Bank goes down it is taking everyone down with it, when, as cited by Bloomberg, he warned of “fatal consequences” for savers and pension plans while “companies refrain from investments due to ongoing uncertainty and demand less loans.”

End of quote.

Now, none of this is new. The impact of Zero Interest Rate Policies (ZIRP) on creditors is self-evident.

But what this article triggered for me was the realisation that the “main street” banks’ traditional business of seeking deposits from creditors and lending it out (forgetting fractional reserve lending for the moment) is being dismantled by ZIRP. It means they are even more dependent upon the washing machine derivatives game for their profits. And when the plug gets pulled on the washing machine…

So, is part of the ZIRP plan to effectively destroy the main street banks, again as part of the move to a new global “lifesaving” currency?

Ohhh… and there is yet another update in the article of the inexorable decline of the Deutsche bank share price as it swirls around the toilet bowl…

I wonder if it’ll hold together until the Shemitah date of October 2nd? If you use the Lehman Brothers graph is a predictor, it’s almost bang on target.

The fallout of Deutsche Bank’s failure will be hard to imagine and impossible to contain.

We do, indeed, live in interesting times…

 

Richard

 

Check out the extraordinary new, life-changing technology at www.magravsplasmaproducts.com

 

Diving Into Deutsche Bank’s “Passion To Perform” Balance Sheet

Deutsche Bank shares have collapsed to lows deep under crisis lows and collapse of Lehman in the Great Financial Crisis…

What’s going on?

An investigation of Deutsche Bank’s “Passion to Perform” balance sheet provides the clues.

The above clip from Deutsche Bank’s First Quarter 2016 Statement.

Details in red from page 61 (PDF page 63) of the 126 page report.

Key Liabilities

  • €559 billion deposits
  • €562 billion negative derivatives
  • €151 billion long term debt

World’s Most Systemically Dangerous Bank

Zero Hedge commented on the World’s Most Systemically Dangerous Bank.

Here’s the key chart.

Deutsche Bank Share Price

What Went Wrong?

Deutsche Bank’s price to book value is 0.251.

Effectively the market suggests Deutsche Bank is worth 75% less than book value. Why?

  1. Is it derivatives?
  2. Are bank assets over-inflated?
  3. Other assets prices inflated?
  4. Liabilities understated?
  5. What about Brexit?

Brexit is the easiest explanation to throw out. Share prices started collapsing a second time starting at the beginning of 2014.

The bank has always been heavy in derivatives. Although recent activity may have led to losses or more scrutiny, it’s relatively easily to discard that as the primary answer.

Banking Sector Malaise

Instead of pondering the obvious problems, what about other things?

  1. Targe2 imbalances starting to matter
  2. Italian banking woes starting to matter
  3. Rising chance that Eurosceptic leaders take control of Italy.
  4. What if Eurozone intrabank balances are in question?

My best guess is that Deutsche Bank share prices reflect all of the above but something in the second set of reasons, or something we still do not fully understand is the primary reason behind the collapse.

End of quote.

I have nothing to add.

Richard

Check out the extraordinary new, life-changing technology at www.magravsplasmaproducts.com

“Deutsche Bank Poses The Greatest Risk To The Global Financial System”: IMF

From Zero Hedge:

Over three years ago we wrote “At $72.8 Trillion, Presenting The Bank With The Biggest Derivative Exposure In The World” in which we introduced a bank few until then had imagined was the riskiest in the world.

As we explained then “the bank with the single largest derivative exposure is not located in the US at all, but in the heart of Europe, and its name, as some may have guessed by now, is Deutsche Bank. The amount in question? €55,605,039,000,000. Which, converted into USD at the current EURUSD exchange rate amounts to $72,842,601,090,000….  Or roughly $2 trillion more than JPMorgan’s.”

So here we are three years later, when not only did Deutsche Bank just flunk the Fed’s stress test for the second year in a row, but moments ago in a far more damning analysis, none other than the IMF disclosed that Deutsche Bank poses the greatest systemic risk to the global financial system, explicitly stating that the German bank “appears to be the most important net contributor to systemic risks.”

Yes, the same bank whose stock price hit a record low just two days ago.

End of quote, though the rest of the article is worth reading.

Watching Deutsche Bank over the last few years has been like watching a train wreck unfolding in slow motion. It’s risk appetite on many levels has meant that it’s failure was only a matter of timing.

And let’s not forget who the IMF is. Like the World Bank, the BIS and others, they are tools of the Jewish global banking elite, posturing as good guys when that’s the last thing they are.

And, also, let’s remember the Economist – a recognised Rothschild mouthpiece and used to foretell future events – had a cover a couple of years ago predicting a new global currency in 2018. I’d say they’re right on track.

We don’t have long to change the rules on them – or have events unfold in our world that achieve that end. I see a couple of candidates.

Richard

Check out the extraordinary new, life-changing technology at www.magravsplasmaproducts.com

Deutsche Bank Tumbles Near Record Lows As Yield Curve Crashes

Despite major jawboning and bond-buying by The ECB, Deutsche Bank’s “see it’s not Lehman after all” dead-cat-bounce has officially died as the giant German bank’s stock collapses back near record lows.

With Europe’s bond curve crushed (and 10Y Bunds trading 1.1bps today), it’s beginning to look a lot like Lehman again…

End of quote.

We know where the Lehman scenario led us; the 2008 GFC.

 

Richard

 

Check out the extraordinary new, life-changing technology at www.magravsplasmaproducts.com

Wall Street, Manipulation and Lies…Oh My

Lynette Zang keeps telling us what’s going on. And it ain’t pretty.

In late 2016, I wrote that Deutsche Bank was in its death throes. However, clearly it was too early for the global controllers to let it die and it looked like Chinese money was injected to keep the corpse with a heartbeat.

But as Lynette shows, Deutsche Bank is still at the heart of the global commercial banking system, and the current market falls may be enough to trigger its insolvency.

We do live in interesting times…

Richard

Check out the extraordinary new, life-changing technology at www.magravsplasmaproducts.com

5 Urgent Warnings From Big Banks That The “Economy Has Gone Suicidal”

I do not wish to belabour the point but I find myself coming back to the state of the global economy, and most seem to be operating like the precipice we are on the edge of does not exist:

The economy has gone suicidal.

It is working against the very people who need its energy to survive. It is collapsing on its own weight, and the weight of literally incalculable levels of toxic debt. And it is going to create the greatest disaster of our time, if the warnings from the world’s most powerful bankers are any indication.

While the general population is obsessed with the details of the world’s most entertaining and bizarre election in American history, the big banks are gearing up for a deadly serious economic collapse.

Just during the past few weeks, there have been major discussions about stock markets dropping, the insolvency of Europe’s biggest investment bank, the mounting debt crisis and a deeper, long-term decline for ‘everyday Americans.’

Here’s what you probably missed while the Hillary-Trump cage match has taken over the collective psyche:

  1. HSBC Issues “Red Alert” Over Imminent Sell-Off of Stocks…
  2. M.F. Issues “Stability Warning” Over Deutsche Bank
  3. Bank of America Warns That a Recession is Imminent, and Unavoidable
  4. Macquarie Group’s Leading Investor Warns That the Private Sector Will Never Recover From QE3… and the Age of Human Jobs Is Over
  5. The Bank of International Settlements – the Central Bank of Central Banks – Warns of Chinese Economy Meltdown

But of course there is more.

End of quotes.

Read the article for the detail.

I urge you to be prepared, in your own way, for what looks to be the largest economic meltdown and restructuring in our lifetimes and what some pundits are saying will be the greatest redistribution of wealth in human history.

Richard

Check out the extraordinary new, life-changing technology at www.magravsplasmaproducts.com

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