Dramatic Deutsche Bank share price drop to lowest level since 1980’s sparks fears it could collapse and trigger global financial panic
Shares crashed to their lowest level since the 1980's yesterday - amid fears the German bank could collapse like Lehman Brothers and crash the world economy
SHARES in Germany’s biggest bank crashed to their lowest level since the 1980s yesterday - amid fears it could collapse and trigger global financial panic.
The plight of Deutsche Bank, run by Brit John Cryan, has the potential to devastate not only Germany’s financial system, but could hurt the UK’s as well.
Its share price fell below €10 early yesterday.
British banking stocks also slumped in early trading with Barclays and Lloyds both falling around 2.5 per cent, and RBS dropping 1.6 per cent by late morning.
It came amid concerns Deutsche could become the next Lehman Brothers, the US bank, whose collapse effectively heralded the start of the 2008 financial crash.
Deutsche’s decline has come over time.
Its share were worth close to €100 before the crash.
But last October it announced 9,000 jobs cuts and in January this year, it reported its first annual loss since the credit crunch.
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The trigger for its most recent woes was a $14billion (£10.8billion) fine, the Department for Justice in the US hit it with last month.
The penalty was related to toxic-mortgage backed bonds it issued in the build-up to the last financial crash.
Mr Cryan, its Yorkshire-born chief exec, moved to calm fears yesterday, telling staff its finances are strong.
He wrote in an email: “We should consider this in the context of the bigger picture: Deutsche Bank overall has more than 20 million clients.
“I understand if you feel concerned by the extensive coverage on this issue. Our bank has become subject to speculation. Ongoing rumours are causing significant swings in our stock price.
“It is our task now to prevent distorted perception from further interrupting our daily business. Trust is the foundation of banking. Some forces in the markets are currently trying to damage this trust.”
But with German chancellor Angela Merkel said to be against a bail-out by her government - its crisis is growing.