Deutsche Bank In Need Of Some Good News, But Liquidity Is Stable

Following Bloomberg’s report that select funds had withdrawn “some excess cash and positions held at the lender,” the market reacted “nervously."

Goldman Sachs’ Jernej Omahen maintained a Neutral rating on Deutsche Bank AG (USA) DB, with a price target of €14.20.

Market Concerns

“We believe DBK’s liquidity position (2Q16) is stable – and further strengthened by ECB funding backstops, which remain available to all Eurozone banks,” Omahen mentioned.

However, the analyst also noted that the market reaction to the ADR, following a single piece of news flow, indicates the level of concern in the market.

Related Link: 4 Reasons Deutsche Bank Will Be Okay, According To CEO John Cryan

Omahen believes that as market concerns escalate, reaching a resolution to litigation and addressing capital concerns would be important.

Stable Liquidity

The analyst pointed out that Deutsche Bank had a high liquidity reserve of €223 billion or 20 percent of the net balance sheet. The company also had an LCR of 124 percent, higher than some of its peers, with the lowest volatility funding.

“Other customer” funding, which Omahen stated included Prime Brokerage, accounts for €71 billion.

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