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The reaction in terms of Deutsche’s stock price was swift.
Of course, there will be negotiations between DOJ and Deutsche Bank to lower the demand amount. Consider the DOJ’s demand the opening salvo.
Then again, how low can Deutsche Bank go? They have declined precipitously since the financial crisis (and The Great Recession) and all the ECB’s negative deposit rates and all the ECB’s asset purchases can’t putt Deutsche Bank together again.
In other words, in the long-run, today’s decline in Deutsche Bank’s stock price is barely noticeable.
Deutsche Bank’s contingent convertible (Coco) yield for their 6% bond just rose to 11.3%.
Correction! DB’s 6% Coco bond yield just rose to 11.58%.
If Deutsche Bank cannot negotiate a substantial reduction in the DOJ’s demands, then their top management will likely be spending more time at the Coco Locos beach bar.
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