Deutsche Bank (DB)
Deutsche Bank (DB) has been a mess for some time now. While U.S. financials have rallied in the past few years — a weak 2018 notwithstanding — DB stock has done almost nothing but go down. The stock touched an all-time low this month before a recent, modest rally. The rally came in large part due to reports that the German government was looking to give Deutsche Bank some help.
Most notably, Germany seems to set to make it easier for DB to merge with Commerzbank AG (CRZBY). Whether the combination will work is up for debate. There’s certainly an argument that putting two struggling banks together is unlikely to result in one stronger entity.
But Germany’s interest in shoring up Deutsche Bank suggests that the bank has friends in high places, and a Commerzbank tie-up could drive cost savings and reposition the banks to again compete on the global market. This remains a high-risk story but backing from the central government could remove at least some of that risk. And with DB trading at just 0.24x book value, dip-buyers will be watching the German government’s actions closely.