German Bank & Co: Threatens a new banking crisis? – Tagesspiegel

19:56 By Andreas Oswald <- self.position: 1 -> <- classId: HCF-center -> <- position: center -> <- textposition: HCF text-left -> <- inIsPrint: false -> <- inHasPic: true ->

the price declines in banks arouse fears of a banking crisis , What factors play a role? Questions and answers.

<- inTeaserPicPosition: 1 -> <- self.position: -1 -> <- classId!: ! HCF-inline-left -> <- position: left - textposition -> <-> <- inHasPic:! true -> <- ! - include ps2 -> <- self.position eq 2 -> <- inTeaserPicPosition: 1 -> <- self.position: 2 -> <- classId: HCF-inline- ! left -> <- position: left -> <- textposition: -> <- inIsPrint: false -> <- inHasPic: true ->

After the worldwide crash the bank shares in the past week wring Institute therefore regain lost trust. One of the most powerful bankers of the world, Jamie Dimon of JPMorgan, said he would use $ 26 million private money to to buy shares of its own bank. John Cryan, co-head of the hard-ridden Deutsche Bank, announced that his institute would buy back its own bonds out of 5.4 billion dollars.

However, the rallies of Friday not mean that the worst is really over. For this are two reasons that can not be eliminated as quickly.

<- inTeaserPicPosition: 1 -> <- self.position: -1 -> <- classId: HCF-inline- ! left -> <- position: left -> <- textposition: -> <- inIsPrint: false -> <- inHasPic: true -> <- include ps1 - ! -> <- self.position eq 2 -> <- inTeaserPicPosition: 1 -> <- self.position: 2 -> <- classId: HCF-inline-left -> <- textposition: -> <- inIsPrint: false -> <- inHasPic: true ->

Why banks break revenue ? off

First, the banks break away revenue. You must pay penalty interest when they park their money with the bank. This negative interest rates are losses that they can not pass on to their customers in the current market environment

In addition, they can -. Second -. By the customers themselves require only low interest when they lend money

Why press the central banks interest rates ever?

Both depend with the loose monetary policy of the central banks together, push the interest rates to stimulate the economy and inflation and its currency cheap to make. The banks want to force the banks to channel money into more profitable areas of the economy where profitable simultaneously means more risk

The banks have thus assuming higher risks in lending.. It is a dilemma: on one hand, much has been done to stabilize the banks after the last financial crisis, at the same time compels they now, again to take more risks. These relationships appear to have arrived at the investors. Fast panic they eject bank stocks last week.

What are the differences between the US and the rest of the world?

It is interesting that the Bank shares have fallen most in the euro zone and in Japan, less in the United States. There are no negative interest rates. While the head of the European Central Bank (ECB), Mario Draghi, is ready to tighten the negative interest rates in March even further to keep Janet Yellen, head of the US Federal Reserve, more rain. She did not rule out negative interest rates, but they are not currently planned, she said last week before the US Senate Committee on Financial Affairs.

It could be that the banking system in the US will be more stable if Yellen again dispensed with negative interest rates. In any case, the US and the rest of the world are on a path of divergence. The Fed has increased on 16 December for the first time in nine years interest rates. By contrast, the euro zone, Japan and most emerging markets ease monetary policy further.

The question is whether the ECB does not have to reconsider its policy, it’s clear that negative interest rates threaten the banking system.

<- classId: HCF-inline-right -> <- textposition: -> <- inIsPrint: false -> <- inHasPic: true -> <- self.position eq 2 -> <- self.position: 2 -> <- classId: HCF-inline-left -> <- position: left -> <- textposition! : -> <- inIsPrint:! false -> <- inHasPic: true ->

have the markets only seen the development of late

New these relationships are not. This raises the question: Why are the bank stocks now under so much pressure? Have the markets the correlations seen only belatedly, which sometimes occurs, or there is an invisible threat in the banking sector, circulated by the only eerie premonitions, without there being solid facts? That would be disturbing. Or the whole thing is a purely psychological phenomenon. Yourself suddenly spreading fear, there are always, the best example is the October 1987, when the courses broke and no one knew why.

The question is whether the rest of Friday continues and all a Spooky was, or whether really threatens a banking crisis. The next few days will show, will go in which direction to travel.

A report of the author, why investors should be wary of bank bonds, can be found here.

A report of the author, how investors can protect themselves from crashes by “rebalancing” of the portfolio can be found here

. <- self.position eq 1 -> <- self!. position: 1 -> <- classId:! HCF-center -> <- position: center -> <- textposition: HCF-text-left -> <- inIsPrint: false - -> <- inHasPic: true ->