- If “Europe Is Fine” Why Is Deutsche Bank Deleveraging At The Fastest Pace Since The Crisis of 2011?
by Tyler Durden, www.zerohedge.com
Early today, Deutsche Bank disappointed markets when it reported a second quarter Net Income number of €335 million, or half of what the company made in the previous quarter, and less than half of what consensus expected. However, just like in the US, where as we showed previously it was FASB accounting gimmicks that “allowed” Bank of America to convert a loss into a $4 billion profit, so Deutsche Bank’s real Net Income, aka its Total Comprehensive Loss, number when factoring all the other MTM Income Statement components such as AFS, FX translation and pension adjustments, was lower by €1.1 billion.
But not even that was the real story in DB’s numbers. Recall that it was Zero Hedge who in April first brought attention to Deutsche Bank’s epic, single biggest on earth, total gross derivative exposure of €55.6 trillion, bigger than that of JP Morgan: disclosure which as we understand caused some consternation among German political circles. This followed our previous disclosure from May 2012 when we first reported that the bank’s Core Tier 1 ratio as the worst of any bank in Europe, and thus the world. This was subsequently reinforced by none other than former Kansas Fed president and current FDIC Vice Chairmam, Tom Hoenig, who said that Deutsche Bank is “is horribly undercapitalized… it’s ridiculous.” Naturally this means that just like every US bank, the real story is not in the income statement but in
the balance sheet.