Deutsche Bank toxic derivative losses

peter3hg

It isn’t nonsense. I don’t think anybody is trying to claim that DB aren’t in trouble, but a proper understanding of the figures is needed to assess the risk and any possible contagion to other areas of the market.
The notional value isn’t a useful figure for this. It just gives the financial value of the underlying measure that the derivative is based upon. Nobody stands to gain or lose that nominal value.
Most derivatives also involve opposing contracts, so netting off needs to be taken in to account.

DB’s accounts from the end of 2017 shows their derivatives book had a nominal value of €48.265tn but a net market value of €20.1bn. It is the second number that is the important one.

https://annualreport.deutsche-bank.com/2017/ar/risk-report/risk-and-capital-performance/credit-risk-exposure/credit-exposure-from-derivatives.html

Have a read of the first part of the OCC report below. It explains in detail how risk is assessed with derivatives.
https://www.occ.treas.gov/topics/capital-markets/financial-markets/derivatives/pub-derivatives-quarterly-qtr1-2019.pdf

lisyloo

Tomorrow there will be scenes like in the film the big short outside DB and so many employees collect their personal belongings

So some people lose their jobs and some of those will find new jobs straightaway.
Not exactly the global financial crisis you’ve been predicting.

Thrugelmir

lisyloo wrote: »

So some people lose their jobs and some of those will find new jobs straightaway.
Not exactly the global financial crisis you’ve been predicting.

Seems as if London and New York will taking the biggest hits. Further contraction in the banking industry. Someway to go yet. With Eurozone banks a long way short of meeting future Basle 111 capital requirements.

jonesMUFCforever

The problem has been brewing for a number of years now - the best option for the German government would be to nationalise the bank or at least pump billions of euros into it such as what happened in UK in 2008 - but hold on EU rules means they can't do that. How embarrassing for the Germans if it goes under (not for one minute would they let that happen - an EU fudge would mean some money from somewhere would be found).

At least the BBC news didn't blame Brexit LOL.

AG47

jonesMUFCforever wrote: »

The problem has been brewing for a number of years now - the best option for the German government would be to nationalise the bank or at least pump billions of euros into it such as what happened in UK in 2008 - but hold on EU rules means they can't do that. How embarrassing for the Germans if it goes under (not for one minute would they let that happen - an EU fudge would mean some money from somewhere would be found).

At least the BBC news didn't blame Brexit LOL.

He's that's why they could bail out the Greek banks or the Italian banks, or any other European banks.

Some talk about letting it fail and carry on, but it's a too big to fail bank because of the reprocess ions of the fifty trillion derivative books.

A completely different ball game to the Greek, Italian and all other banks.

When the first domino knocks over the larger one and so on".........

westernpromise

peter3hg wrote: »

It isn’t nonsense. I don’t think anybody is trying to claim that DB aren’t in trouble, but a proper understanding of the figures is needed to assess the risk and any possible contagion to other areas of the market.
The notional value isn’t a useful figure for this. It just gives the financial value of the underlying measure that the derivative is based upon. Nobody stands to gain or lose that nominal value.
Most derivatives also involve opposing contracts, so netting off needs to be taken in to account.

DB’s accounts from the end of 2017 shows their derivatives book had a nominal value of €48.265tn but a net market value of €20.1bn. It is the second number that is the important one.

https://annualreport.deutsche-bank.com/2017/ar/risk-report/risk-and-capital-performance/credit-risk-exposure/credit-exposure-from-derivatives.html

Have a read of the first part of the OCC report below. It explains in detail how risk is assessed with derivatives.
https://www.occ.treas.gov/topics/capital-markets/financial-markets/derivatives/pub-derivatives-quarterly-qtr1-2019.pdf

You're wasting your breath. The OP thinks, despite having had it explained several times, that if you buy something for £100 and it's worth £99, you are therefore down £199 rather £1.

Thrugelmir

westernpromise wrote: »

You're wasting your breath. The OP thinks, despite having had it explained several times, that if you buy something for £100 and it's worth £99, you are therefore down £199 rather £1.

Rather more complex than that.

Out,_Vile_Jelly

I heard the news this morning and thought how excited AG47 would be as he fingered his little pile of gold coins.

MobileSaver

westernpromise wrote: »

The OP thinks, despite having had it explained several times, that if you buy something for £100 and it's worth £99, you are therefore down £199 rather £1.

Thrugelmir wrote: »

Rather more complex than that.

Well, yes, of course, but as AG47 can't even understand the basic concept as explained above it's pointless trying to explain the nuances of derivatives.

In a nutshell, as unequivocally stated by the IMF and confirmed by the FT (and I may add explained ad nauseum to AG47 by most posters here...) "Deutsche Bank's net exposure is infinitesimal compared to the notional number."

And for the benefit of AG47 who may struggle with long words infinitesimal means "an extremely small quantity; a value approaching zero."

movilogo

UK leaving EU.

German bank failing.

Merkel shaking.

Co-relation or co-incident?