by Pam Martens and Russ Martens, Wall Street On Parade:
Our email inbox yesterday and this morning raised more alarm bells for the mega banks – you know the ones we mean; the ones that should have been broken up before we were on the cusp of the next downturn. Here’s a quick rundown before we get into the details:
- Deutsche Bank announced it will take an approximate $7 billion writedown in the third quarter and potentially eliminate its dividend;
- Charles Schwab is out with a report on the potential for deflation and what it could do to corporate earnings;
- The Treasury’s Office of Financial Research released a report on big bank liquidity concerns;
- Bank of America released a report on the $100 billion exposure that the troubled commodities firm, Glencore, poses to global financial institutions;
- Bloomberg Business is reporting on the anticipated revenues downturn when big U.S. banks begin to report third-quarter earnings next week.
Let’s start off with the Deutsche Bank writedown. That’s a monster amount: $7 billion exceeds JPMorgan’s London Whale fiasco of $6.2 billion. To put things in perspective, as of yesterday’s close, Deutsche Bank has a market cap (value of all of its shares outstanding) of $39.7 billion versus JPMorgan’s market cap of $229.7 billion. That pretty much tells you that Deutsche will, indeed, have no choice but to eliminate its dividend.
Deutsche Bank’s kitchen sink writedown announcement was big on numbers and light on specifics. Here’s how it described the biggest chunk of the writedown:
“An impairment of all goodwill and certain intangibles in Corporate Banking & Securities (CB&S) and Private & Business Clients (PBC) of approximately EUR 5.8 billion. This is largely driven by the impact of expected higher regulatory capital requirements on the measurement of the value of these segments as well as current expectations regarding the disposal of Postbank.”
Please follow SGT Report on Twitter & help share the message.