Sunday Update: Deutsche Bank is not out of the woods yet (see the Bloomberg article), but it's a pretty good bet that it won't collapse like Lehman did (see the Barron's article).

Bloomberg: " Germany’s Business Chiefs Back Deutsche Bank Amid Mounting Woes"

quote:
Leaders of Germany’s biggest companies rallied behind Deutsche Bank AG, saying in newspaper interviews that the lender now facing a hefty U.S. fine and a court fight in Italy is crucial for the country and its businesses in a globalized world.

In interviews with Frankfurter Allgemeine Sonntagszeitung, leaders of DAX corporations, including Daimler AG, Munich Re, Siemens AG and Deutsche Boerse AG, underscored that nationality still plays an important role when it comes to the choice of lenders.

"The German industry needs a German bank that accompanies us out into the world," BASF SE Chairman Juergen Hambrecht told the newspaper. "The power games out there in the market aren’t transparent, but they’re there."

Why else would they continue saying this, unless they thought that DB might still need some government help?

Barron's: " Is Deutsche Bank Really the Next Lehman?"

quote:
By contrast, adds Mackintosh, “Deutsche is different. It has a far more diversified client base, sourced from German retail banking and multiple institutional business lines. It has a lot more liquidity, amounting to €220 billion ($246.8 billion) at the end of June, equal to 12% of assets, against the $45 billion Lehman had a month before its downfall, 7.5% of assets.”

Mackintosh concedes that Deutsche has a weak capital position made worse by weak profitability, “but its problems aren’t as critical as Lehman’s, where losses amounted to more than a tenth of shareholder equity in each of the final two quarters of its life.

“Most important, Deutsche has access to the European Central Bank as its house pawnbroker, meaning it can turn even fairly hard-to-sell assets into cash if it needs to,” Mackintosh adds. “Lehman was refused extra credit by the U.S. Federal Reserve on the basis that it didn’t have enough reliable assets to post at the bank.”

But DB will mostly certainly get government help if it needs it, whether from Draghi at the ECB, or from Merkel courtesy of the German taxpayers.