BREXIT effect on Deutsche bank: Don’t panic people!! None among the highest levels of the German capital market, included the Deutsche Bank CEO John Cryan, believed the UK would have voted for Brexit. On the 24th of june, unfortunately, they had soon changed their idea on the matter and they had immediately putted their words into action in order to save the already crack Deutsche Bank. The bank stocks collapsed in a single day like a pack of cards by almost the 20% when the Brexit news came out.
A stock market crash fully exploited by the famous magnate George Soros who shorted about $7 million worth of Deutsche Bank shares, that is to say he bet that Deutsche Bank stock would fall in the wake of Brexit vote and naturally he won and earned an uncountable quantity of money. Because of the Brexit, Deutsche Bank and its shares are under heavy pressure, and the banks fate has serious implications for the global economy.
In a june 29 report, the International Monetary Fund said Deutsche Bank appeared to be the most important net contributor to risk in the global banking system. Therefore, yes, the Brexit has had a hugely negative impact on the bank fortunes.
Brexit effect on deutsche bank in UK
Deutsche Bank has significant operations in the City, about the 19% of its total net revenue comes from the UK; 8,000 staff members work in London for Deutsche Bank. Obviously, the German institute could see those operations and business adversely affected when Britain departs the European Union. If the UK doesn’t manage to negotiate a deal with the European Union that would allow all the European banks to operate freely in London Deutsche Bank will need to move lots of people elsewhere.
The brexit effect on Deutsche bank causes move from London but also the other European banks, President François Hollande for example guarantee that he will have his part of the industry move to Paris stating that this action should be taken as an example for those who seek the end of Europe.
It is very important to know that many international banks have branches operating in London, which is known for being an international financial center, but actually do little business with UK clients. At this point, it’s clear that the real loser will be London, the City will see its business decreasing terribly in few years.
On the contrary for Deutsche Bank and the others European institutes the move won’t be a problem; most of the business that generates revenue for European banks in London could be done from anywhere in the world. Actually, all this won’t happen immediately because bankers won’t make any moves until it’s clear what kind of deal the UK intends to do with the EU.
Now the picture for Deutsche Bank is not rosy: billionaire fines; the high systemic risk certified by the IMF; and the failure of the U.S. unit in the annual stress test. However, this doesn’t mean that Deutsche Bank is going to bankrupt because its condition is common to many other European banks so this will probably push the European institution to launch a big rescue operation.