El-Erian On Deutsche Bank: They May Need To Provide 'Stronger Assurances' About Financial Health

Financial stocks tumbled Thursday, driven by the 7 percent decline experienced by Deutsche Bank AG (USA) DB, which saw a record 41 million shares change hands.

Shares of the bank plummeted after Bloomberg reported about 10 hedge funds that clear their derivative trades with the bank "withdrawn some excess cash and positions held at the lender."

Among the funds rumored to have reduced their exposure to the European firm were Millennium Partners, Capula Investment Management and Rokos Capital.

Related Link: Financials Are Getting Wrecked Amid Deutsche Bank Worries

As the issue developed, Benzinga contacted Mohamed A. El-Erian, chief economic adviser at Allianz.

"If it is true that some counterparties are stepping back, this would increase the need for Deutsche Bank to provide stronger assurances about its financial health,” he said.

How can the bank be more transparent?

“It can do so through more detailed communications, additional disposal of non core assets, and the identification of other possible steps in its capital strengthening efforts,” El-Erian concluded.

The stock traded recently at $11.45, down 6.9 percent. It touched an all-time low earlier in the day.