Deutsche Bank Rises on Greek Deal; Borrows Billions from ECB

DB: Deutsche Bank logo
Deutsche Bank

Shares of Deutsche Bank (NYSE:DB) added a little more than 5% value over trading on Thursday, as investors found reason to cheer in Greece’s successful debt conversion plan. The fact that the job situation in the U.S. continues to show signs of strength also acted as a sweetener at Wall Street – lifting investor sentiments, and share prices across sectors. The 2-day rally over Wednesday and Thursday largely made up for the losses share prices suffered over the beginning of the week on weak global economic cues (see Global Concerns Hit Bank Stocks Hard). The second largest Swiss bank, Credit Suisse (NYSE:CS), also saw its share value jump by more than 4% for the day.

More recently, a report suggests that the largest German bank borrowed between €5-10 billion ($6.6-13.2 billion) from the European Central Bank (ECB) last week. [1] While it was known that Deutsche Bank was looking for ways to improve its capital structure, this loan comes as a surprising move. This is the first time the bank has essentially received a state-aid, and could hurt Deutsche Bank’s perception of financial strength among its current and potential customers. Investors will also likely react to this piece of information over trading on Friday.

We maintain a $49 price estimate for Deutsche Bank’s stock, which is slightly above current market prices.

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  1. Deutsche Bank Borrows From ECB Emergency Program, NASDAQ, Mar 8 2012 []