Deutsche Bank Has Problems, but Not With Liquidity


The stock exchange in Frankfurt this week as shares in Deutsche Bank dropped.CreditDaniel Roland/Agence France-Presse — Getty Images

Deutsche Bank has credible liquidity shock absorbers.

The German lender reassured its own employees on Friday, not for the first time, after reports that some hedge funds were withdrawing cash. It clearly has big problems, but a 2008-style liquidity implosion need not be one of them.

Since that crisis, regulators have revamped the way they oversee bank liquidity. The centerpiece of this is the so-called liquidity coverage ratio, which tests the quantity of assets a lender holds to withstand 30 days of investors pulling money in a stress situation partly modeled on the financial crisis. The idea is for liquid reserves to be at least 100 percent of likely outflows. Deutsche Bank’s 124 percent as of June is better than that of big peers like BNP Paribas and Citigroup, and means at the very least that regulators have breathing space if lots of Deutsche Bank’s varied customers decide to withdraw their money…

Deutsche Bank Has Problems, but Not With Liquidity

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