Deutsche Bank toxic derivative losses

theEnd

pop_gun wrote: »

So all the media coverage over Deutsche Bank's derivative exposure and potential losses is rubbish? If the bank's unrealised losses is close to zero why are they a story at all? Wouldn't DB issue a press release to clarify matters?

Goldman Sach made €2.37bn of Greek debt disappear so it could join the E.U. They did this through Euro swaps. Why is it inconceivable in a global $1.2 quadrillion derivatives market, to make €10trn disappear?

They have many problems. DB are in all sorts of problems. Hiding losses of $10 trn is not one of them.

Their derivatives problem is more to do with risk profile. The banks get stress tested to see how their portfolio reacts to extreme changes in the market.

A well run bank tries to mitigate these risks (hedging) where possible. DB have performed the worst in these tests.

Hiding a mere 2 bn of govt debt when there were barely any regulations and everyone else was happy to turn a blind eye is not even slightly comparable.

You are suggesting DB have lost $10,000,000,000,000 and yet they've hidden it and their counterparties are not reporting any profits?

Get real.

AG47

theEnd wrote: »

They have many problems. DB are in all sorts of problems. Hiding losses of $10 trn is not one of them.

Their derivatives problem is more to do with risk profile. The banks get stress tested to see how their portfolio reacts to extreme changes in the market.

A well run bank tries to mitigate these risks (hedging) where possible. DB have performed the worst in these tests.

Hiding a mere 2 bn of govt debt when there were barely any regulations and everyone else was happy to turn a blind eye is not even slightly comparable.

You are suggesting DB have lost $10,000,000,000,000 and yet they've hidden it and their counterparties are not reporting any profits?

Get real.

So you really think DB did not lose all those bets, and they actually won them?

Well then in that case, maybe it's JP Morgan and Goldman Sachs who are hiding the trillions of derivative losses?

AG47

Hyper alert, the bond market is selling off

Thrugelmir

Becoming repetitive same line without substance. Change the record.

AG47

Quick note on Deutsche Bank: their "surprise earnings" gain of $300M in 3Q is laughable as interest rate derivative trading is where they made most of the money and as Bloomberg pointed out...they misstate their multi-trillion dollar interest rate derivative book! The real news is that their deposit base dropped over $16B in the 3rd quarter alone and that's not counting October withdrawals as people were even more inclined to get their money out while they still can. That's want you call a RUN on the bank and DB will have to start selling off their assets again to meet minimum capital ratio requirements. More on the DB collapse in the days/weeks to come as the take down intensifies.

AG47

Here is the Bloomberg article

http://www.bloomberg.com/news/articles/2016-10-26/deutsche-bank-said-to-review-its-valuations-of-inflation-swaps

pop_gun

theEnd wrote: »

They have many problems. DB are in all sorts of problems. Hiding losses of $10 trn is not one of them.

Their derivatives problem is more to do with risk profile. The banks get stress tested to see how their portfolio reacts to extreme changes in the market.

A well run bank tries to mitigate these risks (hedging) where possible. DB have performed the worst in these tests.

Hiding a mere 2 bn of govt debt when there were barely any regulations and everyone else was happy to turn a blind eye is not even slightly comparable.

You are suggesting DB have lost $10,000,000,000,000 and yet they've hidden it and their counterparties are not reporting any profits?

Get real.

If DB falls at least 5 other banks would follow. It's in those counterparties interests for DB to stay in the game.

DB has been in trouble for years. The U.S. targeted it for exactly that reason. DB's plight is politically motivated. Their losses won't be realised by those holding the winning betting slips, for the reasons stated.

In this game, winning is losing.

Out of interest how regulated is the derivatives market? If the Euro swaps didn't have much regulation then the derivatives market would have even less regulation given the sums of money involved.

p.s. In a post LIBOR world, you don't get to pretend banks won't collude with each other. That won't wash.

theEnd

AG47 wrote: »

So you really think DB did not lose all those bets, and they actually won them?

Well then in that case, maybe it's JP Morgan and Goldman Sachs who are hiding the trillions of derivative losses?

The trillions of derivative losses only exist in your head.

I do not think DB won all those bets. Most* banks are fully hedged. They win some, they lose some. The profit is made on the spread to the end user (Corps, Commercial Banks). The interbank trades are margined daily. There is very little profit or loss that is left unrealised.

* That said, DB are obviously not well hedged as they wouldn't have failed the stress tests, so they are exposed to big market movements (possibly in the billions, nowhere near trillions).

theEnd

pop_gun wrote: »

Out of interest how regulated is the derivatives market? If the Euro swaps didn't have much regulation then the derivatives market would have even less regulation given the sums of money involved.

It's very regulated now.

Not only that, it's a much simpler market now. Some older, complex stuff, but now most of it is vanilla and a lot of netting has gone on to reduce the noise in the market.

Back in 07, everyone had huge, complex positions. They were pricing some stuff wrong, no clearing, no repositories, no stress tests, nothing.

I'll repeat yet again. I think DB have been mismanaged and are in big difficulties. But let's keep the debate to serious analysis, not pretending there's $10 trn missing somewhere. Seriously???

pop_gun

theEnd wrote: »

It's very regulated now.

Not only that, it's a much simpler market now. Some older, complex stuff, but now most of it is vanilla and a lot of netting has gone on to reduce the noise in the market.

Back in 07, everyone had huge, complex positions. They were pricing some stuff wrong, no clearing, no repositories, no stress tests, nothing.

I'll repeat yet again. I think DB have been mismanaged and are in big difficulties. But let's keep the debate to serious analysis, not pretending there's $10 trn missing somewhere. Seriously???

Back in 07 very few people were talking about a market crash and those who did, were thought of as part of the tin foiled hat brigade.
The problems are even worse than they were during the 08 crash, yet many are acting as though everything is fine.

The stress test is the equivalent of putting a feather on the back of an elephant and seeing if it buckles under the additional weight. There's no mark to market. So an asset price is whatever the holder says it's worth. It's a wonder any bank fails those tests. But some do. Which leads me to believe there's an ulterior motive for why the stress tester said they did.

The $10trn could've been repackaged as CDOs and sold on. DB has an obligation, but doesn't realise the losses.
Hedge funds, banks and other financial institutions could hold all of that $10trn and the mainstream media would be none the wiser.