German, Italian Banks Versus US Banks And Their Central Banks Balance Sheets (Deutsche Bank’s 6% CoCo Bond Now Yielding 14%)

The German banks Deutshe Bank and Commerzbank along with the Italian bank Banca Monte dei Paschi di Siena crashed after the global financial crisis in 2008 despite an enormous spike in European Central Bank asset purchases.

On the other hand, US banks benefited from The Federal Reserve’s massive balance sheet expansion, at least until Covid hit in 2020.

Deutsche Bank’s 6% CoCo (Contingent Convertible) bond was issued in 2014. Contingent convertibles work in a fashion similar to traditional convertible bonds. They have a specific strike price that once breached, can convert the bond into equity or stock. The primary investors for CoCos are individual investors in Europe and Asia and private banks.

The yield on DB’s 6% CoCo bond is now 14%.

Deutsche Bank’s price is sinking like the battleship Bismarck along with its earnings per share.

Then there is the gold spoofing scandal at DB.

A photo of Deutsche Bank’s headquarters from 2005 before the financial crisis and after the financial crisis in 2008.