the zero bound
However, as noted above, the biggest threat to DB is not so much its hedge fund client base, whose damage potential is limited, but the depositor base. Again: while Lehman failed, it did so as a result of its corporate counterparties suffocating the bank by rapidly pulling out their liquidity lines. Lehman, however, was lucky in that it didn't have retail depositors: it death would have likely come far faster as the capital panic was not limited to institutions but also included a retail depositor bank run.
This is where Deutsche Bank is very different from Lehman, and far riskier, because if the institutional panic spreads to the depositor base, which as the table below shows amounts to some €566 billion in total, and €307 billion in retail deposits...
and it goes somewhere here
BILL BAER. The U.S. Justice Department’s No. 3 official is calling the shots in the Deutsche Bank talks. An antitrust lawyer by training, Baer was previously chief of the division that oversees reviews of mergers and acquisitions, where he gained a reputation for aggressively opposing deals the department deemed anticompetitive. Baer last year secured guilty pleas and $6 billion in penalties from a group of lenders over currency-market rigging. While he hasn’t directly commented on Deutsche Bank, Baer says banks are to blame for slow progress in mortgage settlement talks. “Each prolonged the period in which a cloud of uncertainty hung over the institution,” Baer said in a speech this week. “And each paid a lot more than it would have if it had cooperated early on.”
ELKE KOENIG. The chairwoman of the Single Resolution Board in Brussels would manage any eventual liquidation or breakup of Deutsche Bank. Koenig is the first chief of the agency, established in December 2014 as a clearinghouse for plans to mitigate the negative impact of any major bank failure. As the former chief of Germany’s banking supervisor, she’s well acquainted with Deutsche Bank’s difficulties.
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