Problems in the main european banks, Deutsche Bank y Monte di Paschi

Year of 2016 has been very different in the bank sector. At the end of summer appear a serie of news involving different banks of UE. It is well known that Deutsche Bank is broken due to its operations in the underlying market, in one year it has lost about 90% of its value. Still, nobody says it is broken but it is because in case of needing liquidity will always be the great Germany to do the dirty work. The most recent controversy was for a US fine of about $ 14k for its role in the junk mortgage crisis..

In the following chart we can see the proportions of Deutsche Bank fall, <90% from maximums and 80% from their normal value of 60 € . In 2008, several of the American banks that were involving in the financial crisis did not reach 90%, and yet they are talking about bankruptcy . In this case due to European interests has been tried to reduce the message and has never spoken of bankruptcy of the Deutsche Bank. Merkel also did not want to talk about bank bailouts , but in this bank someone has had to do things very badly and surely internal measures have been taken . Apart from junk mortgages the bank has taken unnecessary risks by leveraging more than it owes in underlying markets by entering into a systemic crisis. Many of Deutsche's orders have been replicated by several European banks and funds, which has increased distrust of the banking sector. This crisis is not going to be much less temporary and even if the real value recovers a somewhat acceptable value of 30 € is going to be the shadow of huge debt Has to pay and the numerous lawsuits to be resolved. However knowing who protects this bank, both Germany, motor and director of the EU and the ECB believe that nothing serious will happen in these next three years and more when they rise interest rates that give oxygen to the bank.


In the Italian case we have Monte Di Paschi needing a rescue that exceeds 20,000 million euros . The fall of the Italian bank in absolute terms has been very similar to the German with the exception that it had fallen from years ago. In this case the fall of this year has been of 90% since highs, 75% from its average level. In the middle of the year it remained in a lateral wake between 45 € and 70 € ending in disaster in summer when it falls shares until 35 €. Currently the quotation is at its lowest historical level, with the stock worth about € 15 with all ballots lower. Until the bailout comes the bearish pressure will remain and I think it could reach 10 €. In the following chart we can see the evolution of the value this year.


Similar case Bankia that have do very well from 2013 with a excellent team. Having positive returns this two years, I expect Deutsche and DiPaschi recover a acceptable level in three years. This rescue will be exercised by the Italian government. After the announcement of the rescue of the Di Paschi and the reduction of the fine by the USA in the case of Deutsche Bank both banks have experienced a great rebound in their stock market value. However the leftover banking problem persists in Europe and will make you talk.

These cases are very similar to the rescue of several Spanish entities 2 years ago that both criticized from the outside. Bankia has excellent managers right now and the euro that is worth its quote does not represent its potential. These banks have a very loyal and reliable customer base so when it comes to recovering they are much more backed. Plus the rate hike will come in handy. In addition it has had much more repercussion, arriving the government has made a referendum so that the government has much greater control and paper in the financial decisions. This demonstrates that all countries in the euro zone have the same problems but it is always better to throw the ball on the other side.