Europe’s biggest lender Deutsche Bank has lost more than half of its value since January, posing a threat to the stability of other banks across the continent. Some analysts are worried it could invoke a large-scale crisis, bigger than in 2008.
After a massive sell-off on Monday, Deutsche Bank’s market value shrank to €14.5 billion. In dollar terms it is only $2 billion more than the $14 billion penalty the bank faces from the United States Department of Justice over its mortgage-backed securities business before the 2008 global crisis.
Deutsche's problems have raised questions about the health of other big European lenders. The share price of the Royal Bank of Scotland has plunged 13 percent and Italy’s UniCredit is down 12 percent this month. The Bloomberg Europe 500 Banks and Financial Services Index is down 4.2 percent for September. This is the worst result since June, when the Brexit referendum heavily hit the markets.
The problems of Deutsche Bank are putting the German government in a difficult dilemma, as it must decide whether to save the bank, whose assets are valued at about €1.8 trillion, half the size of the German economy.