Deutsche Bank is expected to report its largest loss during last 5 years
This had added to the pressure on the bank to raise capital. Intuitively, the bank may post loss as large as 154 million Euros i.e. $193 million US Dollars.
Last year, the bank earned a profit of 1.62 billion Euros. This shall be the largest deficit of the bank since ’03. Results were influenced by more than $40 million trade loss on account of equity derivatives.
The bank is one of the large banks which haven’t capitalized so far. A large buffer of capital available to a bank makes it shock bearer of losses and control leverage of economy of the country.
The bank is suggested to shrink its assets and reduce its dependence on borrowed money in order to remove then need to raise funding for its operations from investors and getting handouts from the government.
After Lehman Holdings went bankrupt, the financial firms in New York were in a hard time and needed state needs on order to survive.
This has started a new era of strategic planning. The more one leverages, the riskier the business is. Leveraging is currently the yard stick to the stability of a bank.