Deutsche Bank chief Cryan issues reassurance as shares wobble

Deutsche's shares hit record lows on Friday morning, but recoveredafter John Cryan's comments

Click to follow

John Cryan, the chief executive of troubled Deutsche Bank, has sought to reassure his staff that the bank’s finances are strong despite waning confidence in the market that has sent the lender’s shares to new lows on Friday.

In a letter sent to employees, Mr Cryan said “new rumours” were causing the share price to fall.

Deutsche’s shares hit record lows on Friday, but recovered to stand 1 per cent up following his comments.

“Our job now is to ensure that this distorted perception does not more strongly influence our day-to-day business,” Mr Cryan said

“There are forces now under way in the markets that want to weaken confidence in us,” Mr Cryan said.

Mr Cryan’s comments came as Deutsche’s shares fell 9 per cent at the start of trading on Friday. That followed a 7 per cent slump overnight in New York sparked by a report that some hedge funds were pulling money from the bank.

Deutsche’s woes hit bank shares across Europe with Lloyds Banking Group, Barclays and Royal Bank of Scotland all falling by more than 4 per cent at the start of trading in London.They recovered in afternoon trading following Mr Cryan’s comments.

"The release of the memo ... seems to have taken the edge off of the German company's dramatic [share price decline],” said SpreadEx analyst Connor Campbell.

On Wednesday, the German government denied it is considering injecting billions of euros into Deutsche Bank, following reports from a German newspaper it was preparing an emergency rescue package.

Deutsche has been under pressure since it emerged that the US Department of Justice (DoJ) has proposed a $14bn (£10.6bn) fine to settle civil claims regarding its handling of mortgage-backed securities that contributed to the 2008 financial crisis.

The German-based bank is among many financial institutions investigated over dealings in discreditable mortgages in the run-up to the financial crisis. The government has accused the banks of misleading investors about the quality of their loans.

Deutsche Bank has lost about 43 per cent of its market value this year. Net income decreased to €18m (£15m) from €796m a year earlier.

Mr Cryan has been cutting risky assets, freezing dividend payments and eliminating about 9,000 staff to boost capital levels.

In June, the International Monetary Fund (IMF) said that of the banks big enough to bring the financial system crashing down, Deutsche Bank was the riskiest.

Comments