Deutsche Bank shares hit lowest in 24 years

Shares in Deutsche Bank have touched their lowest level in 24 years this morning, as Germany’s largest lender slumps to the bottom of Europe’s banking index.

Deutsche shares slumped by as much as 6.5 per cent to €10.69 in early morning trading – their lowest level on data going back to 1992, according to Bloomberg.

The sell-off has spread to broader European banks this morning, with all lenders on the Euro Stoxx bank index in the red this morning. The index is down 2.3 per cent to its lowest level in five weeks.

UniCredit is off 4 per cent while Deutsche’s fellow German lender Commerzbank is off 3.9 per cent. Credit Agricole has slipped 2.9 per cent, while BNP Paribas has shed 2.6 per cent (read more here).

Seemingly sparking the latest drop in Deutsche shares, local German magazine Focus reported Chancellor Angela Merkel has ruled out providing any state aid for the bank, which has endured a torrid year on the back of concerns of the hit to its margins from negative interest rates and a series of major regulatory fines.

Earlier this month, the US Department of Justice proposed Deutsche pay a record $14bn to settle allegations of mis-selling mortgage securities. The lender has said it will not pay anywhere near the region of the threatened fine which is approaching its total market capitalisation of $18bn.

More broadly, the International Monetary Fund has highlighted Deutsche as the world’s riskiest globally significant lender.

Deutsche’s shares have declined 50 per cent this year, with investor jitters about its capital levels also spreading to the bank’s riskiest form of bonds.

The lender’s hybrid CoCo bond has dropped to its lowest level since February this morning, falling 2.5 cents to 73 cents on the euro. CoCo bonds convert to equity when the bank’s capital falls to a certain level.

On Friday, Fitch ratings noted:

The key challenges for the [German banking] sector remain ultra-low interest rates weighing on profitability, regulatory pressures, intense competition, and in the case of Deutsche Bank, misconduct and litigation charges.

Chart courtesy of Bloomberg