Deutsche Bank shares have crashed another eight per cent this morning as the German stock markets opened for trading.
The lender was plunged into fresh turmoil last night as a string of key clients said they were cutting back on the amount of assets they store with the lender, raising fears some in the market have lost faith in Deutsche Bank. A number of hedge funds also trimmed their exposure to the troubled bank, with share volumes spiking to three-times their normal level on the New York Stock Exchange late last night.
Deutsche Bank: A timeline of where it all went wrong
As the German Dax opened for business this morning, shares in Deutsche Bank, which has a dual listing in both Europe and the US, tumbled by eight per cent, briefly dipping below the symbolic €10 a share mark. That is down from more than €13 at the start of the week and an all-time pre-crisis high of more than €90.
Debt in the lender was also trading at cut-rate prices, with investors selling Deutsche Bank's contingent convertible bonds – so-called cocos, which is debt the bank can convert into equity, thereby "bailing-in" its bondholders in the event of financial stress – for 70 cents on the dollar.
Meanwhile, Deutsche Bank credit default swap prices, effectively the premium that investors pay to protect against a default, jumped from 2.34 per cent to 2.55 per cent.
Deutsche's woes plunged the European markets into turmoil this morning. The Eurostoxx banking index – the collection of Europe's largest listed lenders, fell 4.3 per cent. The FTSE 100 also caught the cold, down 1.2 per cent to 6,835 with banks leading the downwards charge. The euro also slumped against the dollar, falling 0.4 per cent in a matter of minutes to €1.1174.
Earlier in the week German authorities denied they were planning a bailout for the lender, despite reports they were prepared to inject billions of euros to take a 25 per cent stake in Deutsche Bank. Analysts have warned a collapse of Deutsche Bank could trigger a Lehman Brothers style fallout on the global financial markets.