Soros bet on Deutsche Bank shares falling during Brexit

The position taken on Friday was equivalent to 0.51 per cent of Deutsche Bank’s share capital

The world-famous US investor warned 'the value of the pound would decline precipitously' (Getty)

Soros Fund Management took a short position in Deutsche Bank of about 7 million shares as turmoil from the UK’s decision to leave the European Union sent bank stocks lower.

The position taken on Friday was equivalent to 0.51 per cent of Deutsche Bank’s share capital, according to a German filing published on Monday.

The document doesn’t show at which price the fund took the position.

Deutsche Bank shares fell 16 per cent at the open on Friday and closed down 14 per cent at €13.37.

Their highest price that day was €13.95.

At that level, a 0.51 per cent stake would be worth about €98m (£81.2m). After extending losses on Monday, the shares were trading 4.5 per cent higher at 10am Tuesday in Frankfurt.

German newspaper Die Welt reported the sale earlier.

Fallout from the UK referendum could force banks to take losses on trading assets and lead clients to hold back from raising funds and pursuing acquisitions. That may complicate Deutsche Bank’s efforts to lift returns and capital levels to reverse a stock slump that has made it the worst-valued global lender.

The UK’s decision may cut the total net income of European banks in the three years through 2018 by €32bn, while UK bank profits may be €10bn lower, according to analysts at Goldman Sachs.

Marshall Wace

Hedge fund Marshall Wace had 6.62 million Deutsche Bank shares in a short position, according to a filing dated 17 June.

A spokesman for the company declined to comment on the position on Tuesday.

In short sales, investors borrow securities and then sell them in the belief that they will later be able to purchase them for a lower price.

George Soros, the billionaire whose 1992 wager against the pound made hedge-fund history, was “long” the currency before Britain’s vote to leave the EU, a spokesman said in an emailed statement on Monday.

“Because of his generally bearish outlook on world markets,” Soros did profit from other investments, according to the statement.

© Bloomberg