Deutsche Bank AG said clients broadly stuck by it and the firm’s liquidity stayed strong throughout a turbulent March, despite the firm briefly becoming the focus of jittery markets.
(Bloomberg) — Deutsche Bank AG said clients broadly stuck by it and the firm’s liquidity stayed strong throughout a turbulent March, despite the firm briefly becoming the focus of jittery markets.
Chief Financial Officer James von Moltke said Thursday that Germany’s biggest lender was the victim of a “speculative attack” as the firm saw its stock drop as much as 15% on March 24. He didn’t elaborate on the bank’s view on whether the effort was intentional or who was behind it.
While the firm’s deposits dropped by 5% in the quarter, von Moltke said that many clients simply swapped assets into higher-yielding money market funds that stayed with Deutsche Bank. Deposits fell to €592 billion as customers pulled a net €29 billion, but the bank’s liquidity coverage ratio improved in the quarter and it saw inflows of client assets in its asset management and private bank units.
“Once March was over and we were into April, like a light switch, the concerns around the banking industry went away,” von Moltke said in a Bloomberg Television interview. “And we’ve seen deposits stabilize and grow over the course of April. I’d expect we’ll be back over €600 billion by the end of the month.”
While sentiment around European banks has largely settled since Credit Suisse Group AG’s emergency rescue by larger rival UBS Group AG, some lenders in the U.S. are still facing questions about their financial strength. After the collapse of Silicon Valley Bank, attention is now focused on the fate of First Republic Bank, whose stock has seen precipitous drops this week.
First Republic’s issues stem from its stockpile of loans at low interest rates, including an unusually large portfolio of jumbo mortgages to wealthy clients. Those debts have lost value amid Federal Reserve hikes, prompting some depositors to yank their money.
Last month, Deutsche Bank faced a volatile day in its stock price and credit spreads just days after Credit Suisse’s crisis of confidence that forced its sale.
Regulators later focused on a single trade in an illiquid part of Deutsche Bank’s credit default swaps that they suspect sparked concern and fueled a selloff in the firm’s shares, Bloomberg reported last month.
Deutsche Bank said Thursday that its profit jumped almost 8% and that it would look to start a share buyback in the second half of this year.
(Adds details on US problems in fifth paragraph)
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