Breakingviews

Germany gets economic rebalancing only half right

September 29, 2016

The country no longer depends on exports for growth. Strong domestic demand is the key driver these days, a government-commissioned report says. Yet the current account surplus is still rising. Blame not only Angela Merkel’s fiscal restraint but also weak corporate investment.

Past mortgage fines give Deutsche room for hope

September 28, 2016

Settlements by other banks imply the German lender owes up to $5.5 bln for mis-selling mortgage-backed securities. That's much less than the $14 bln the U.S. government wants. But a previous Deutsche fine was much bigger than rivals'. Calculating penalties is an inexact science.

Deutsche Bank has airbags – but only one matters

September 27, 2016

The German lender’s market value has shrunk below 14.5 bln euros on fears of big fines. Yet markets seem calm about knock-on effects. It’s less that post-crisis bank rules are fit for purpose, and more that Chancellor Merkel would have to be brave or foolish to let Deutsche fail.

Hadas: Central banks play with monetary absurdity

September 23, 2016

Monetary authorities have taken recourse in increasingly empty promises. The Bank of Japan's Haruhiko Kuroda has taken this verbal drama to a new and ultimately dangerous level. Central banks could rely on deeds, not words, if their tools and targets were more realistic.

Smaller fine might still force Deutsche fire sale

September 16, 2016

The German lender insists it won't pay as much as the $14 bln proposed by the U.S. Justice Department. But even two-thirds of that amount would deplete its reserves, a Breakingviews calculator shows. Deutsche may then need to sell assets to meet rising capital requirements.

Bayer can still be saved from $66 bln splurge

September 14, 2016

The agreed takeover of U.S. rival Monsanto is too expensive. The German group's investors have probably lost $7 bln in value already. The question is whether antitrust regulators do what shareholders can't and nix the tie-up. Paying the $2 bln break fee would still be preferable.

Chancellor: No hyperinflation, just Weimar malaise

September 13, 2016

Central-bank money printing hasn't produced the spiralling prices that plagued the Weimar Republic. It has, though, delivered some of the social disquiet of 1920s Germany. Policymakers urging more extreme monetary actions need to exercise caution lest they get what they wish for.

Stars are aligning for German bank merger fest

August 31, 2016

Commerz and Deutsche Bank held talks earlier this month on a possible tie-up. These may have come to nought, but low rates and a bleak outlook make consolidation an increasingly good idea. The two biggest players may prefer other tie-ups, though.

Apple’s tax spat could blight European banks

August 31, 2016

The tech giant’s $14.5 bln EU tax bill has shades of a $9 bln U.S. fine handed to BNP Paribas in 2014. Despite big differences, both have the whiff of a transatlantic raid on those deemed able to pay. EU banks awaiting U.S. fines, like Deutsche Bank and RBS, have cause to fret.

Commerz lays bare market over-optimism on EU banks

August 2, 2016

The German bank says negative rates will further weigh on revenues. Investors are already braced for low returns: Commerzbank trades at 0.3 times book. Still, with analysts' earnings forecasts almost twice those assumed in the EU stress test, even more caution is warranted.