Shares of the German lender slid more than 11% on Friday following a spike in the company's credit default swaps Thursday night.
Credit default swaps act as a insurance for bondholders in the event of the company defaults. To be sure, there was no clear catalyst for the spike in Deutsche's credit default swaps. The move comes as concerns about the stability of European banks persisted. Earlier this month, Swiss regulators forced UBS to acquire rival Credit Suisse to shore up the country's banking industry. DB 1D mountain DB falls JPMorgan, however, is maintaining its overweight rating on Deutsche Bank.
Abouhossein pointed to three key strengths for Deutsche Bank: "Strong capital ratios with limited litigation concerns," "Strong liquidity ratios with limited deposit outflows in 2015-18, even [in] times times of stress," Strong profitability, with a net profit of €5 billion in 2022 "We are not concerned today about counterparty, liquidity issues with DBK being Top 5 FICC player globally with $9.5 billion in 2022 FICC revenues," Abouhossein said.
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