Shares of Deutsche Bank (DB) are sinking as the largest German bank has become the latest financial institution to be impacted from the fallout caused by the collapse of Silicon Valley Bank and Signature Bank in the U.S.
The selloff was fueled by soaring demand for Deutsche Bank’s five-year credit default swaps, which are derivatives that act like insurance in case the bank defaults on its payments. Prices jumped to their highest level since 2018 at one point today.
German Chancellor Olaf Scholz tried to ease concerns, saying "there is no need to worry about anything." He added that Deutsche Bank has fundamentally modernized and reorganized its business model, and "is a very profitable bank."
Volatility Not Surprising
Joachim Nagel, president of Germany’s central bank, the Bundesbank, said bank share volatility isn’t surprising considering recent events in the sector. However, he noted that policymakers are ready in case the banking turmoil increases.
Shares of Deutsche Bank are down 7% as of 11am E.T., and they’ve fallen 19% since the failure of Silicon Valley Bank and Signature Bank.