Lede

Deutsche Bank's shares plummeted in a recent market downturn, sparking concerns over the stability of the European banking sector and putting authorities on edge.

Summary

The European banking sector is facing turmoil as Deutsche Bank's shares experienced their most significant drop in three years, raising concerns over the industry's stability. This decline follows the recent rescue of Credit Suisse, which failed to stabilize the broader financial sector.

Despite the announcement of a debt repurchase plan, the market reaction has been labeled "irrational" by some analysts, with other European banks also experiencing steep share drops. Central banks are raising interest rates and focusing on inflation, while German Chancellor Olaf Scholz and analysts express confidence in Deutsche Bank's long-term stability and profitability.

Takeaways

• Deutsche Bank shares drop most in three years, amidst European banking sector concerns

• Financial sector experiences widespread share-price declines

• Credit Suisse rescue provides no stabilization for broader sector

• Deutsche Bank announces debt repurchase plan, perceived as a sign of weakness

• German Chancellor Olaf Scholz publicly supports Deutsche Bank

• Citigroup analysts call market reaction "irrational"

• Other European banks, including Commerzbank, Banco de Sabadell, and Societe Generale, also experience steep share drops

• US banks face sell-off, with Credit Suisse and UBS Group under scrutiny in US Justice Department probe

• Central banks raise interest rates, focusing on inflation while hoping the worst financial turmoil is over

• BaFin, Germany's banking regulator, warns of potential "contagion via psychology of markets"

• Deutsche Bank's credit default swaps jump after debt repurchase announcement

• Cost of insuring Deutsche Bank's five-year senior bonds elevated but not as high as Credit Suisse's stress levels

• UBS offers to buy back bonds issued days before taking over troubled Credit Suisse

• Deutsche Bank shares erase gains from the past six months

• Investors concerned about Deutsche Bank's US commercial real estate exposure and large derivatives book

• German Chancellor Scholz reiterates confidence in Deutsche Bank's stability and profitability

• Deutsche Bank recently emerged from a four-year turnaround plan involving job cuts and exit from investment banking segments

• CEO Christian Sewing explored a potential deal with Commerzbank in 2019, but decided against it

• Autonomous Research analyst Stuart Graham expresses no concerns over Deutsche Bank's viability or asset marks

• Graham emphasizes Deutsche Bank is not the next Credit Suisse, highlighting its modernized and reorganized business model

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