Deutsche Bank has received a much-needed boost after initial trading of a new financial product made it significantly cheaper to hedge against doing business with the under-fire German bank, the Financial Times reported. The cost of buying the new credit default swaps — derivatives that pay out if a company defaults on its bonds — has halved compared with the previous benchmark. This is important because Deutsche has been struggling with spiralling funding and transaction costs as investors have worried about dwindling investment bank revenues and low profitability.
Germany
Read more
Large wind turbine companies and private equity firms are interested in buying insolvent German group Senvion, Chief Executive Yves Rannou told Reuters in an interview published on Friday. “We see significant interest for Senvion from across the board - from financial investors, from strategic parties in the sector, and beyond,” he said, adding that Senvion had mandated Rothschild to find an investor, Reuters reported. “I am positively surprised by how many companies are looking at us, including the big players in our sector who are looking very closely,” he added.
Deutsche Bank and Commerzbank abruptly called off their merger talks Thursday, saying they concluded that the perils of trying to forge a megabank with international clout outweighed the potential benefits, the International New York Times reported. But while Germany’s two largest banks answered one question that had preoccupied the country in recent weeks, they raised another: What next? The status quo is not an option for either Frankfurt bank.
The eurozone’s manufacturing sector remains stuck in a rut as its two largest economies missed expectations and continued to contract in April, according to a closely watched survey of industry executives, the Financial Times reported. The IHS Markit Purchasing Managers’ Index for manufacturing in Germany rose slightly to 44.5 from 44.1 previously, but this was below expectations in a Reuters poll of an increase to 45. The index for the French manufacturing sector fell to 49.6 from 49.7, despite anticipation of a rise to 50.
The German government has halved its growth forecast for 2019 to just 0.5 per cent, highlighting the extent to which wider conditions in the global economy have damaged the health of the eurozone’s economic powerhouse, the Financial Times reported. Peter Altmaier, economics minister, said on Wednesday that the downgrade from an earlier projection of 1 per cent was “a wake-up call” for an economy that over the past decade had experienced one of its most sustained periods of growth in modern history but was now under stress from a global economic slowdown and political uncertainty.
Last summer, Deutsche Bank AG trumpeted a deal to strengthen the finances of Europe’s largest zinc smelter, Nyrstar NV. Less than a year later, the Belgian company is undergoing a massive debt restructuring, and the $150 million financing structure set up by Deutsche Bank is in line for losses of as much as 70 percent, Bloomberg News reported. Although relatively small in absolute terms, the losses are a black eye for Deutsche Bank, one of the leading financiers of the natural resources industry.
Lufthansa has added to worries about the European aviation sector with a profit warning, two weeks after low-cost carrier easyJet spooked the market, the Financial Times reported. In an after-hours statement on Monday, the group said that rising fuel costs would send it to a worse than expected first-quarter loss, prompting its shares to drop 4.4 per cent in early trading on Tuesday. They recovered to trade flat by mid-morning.
ING chief executive Ralph Hamers has approached Commerzbank’s boss Martin Zielke suggesting a cross-border merger of both banks that could include the relocation of ING’s headquarters to Frankfurt, the Financial Times reported. The move from the Dutch adds another twist to the protracted takeover saga over Germany’s second-largest listed lender.
A German court on Tuesday approved an application for insolvency from wind turbine manufacturer Senvion, although the company said it was also continuing to look at new funding options and various potential investors had shown interest, Reuters reported. The Hamburg-based company, which has more than a billion euros of debt, said it had applied for preliminary self-administration proceedings because refinancing discussions with lenders had not yet been successful. Shares in Senvion were down 40.5 percent at 1519 GMT, having fallen as much as 55 percent earlier in the day.