In "Radical Overhaul" 20,000 Deutsche Bankers Will Be Fired As "Bad Bank" Soars To €80BN, 5x DB's Market Cap | WHAT REALLY HAPPENED

In "Radical Overhaul" 20,000 Deutsche Bankers Will Be Fired As "Bad Bank" Soars To €80BN, 5x DB's Market Cap

One month ago, Jeff Gundlach - in his latest DoubleLine investor call - cracked jokes that Deutsche Bank's imploding stock, which has been hitting fresh all time lows virtually every day, had "major support" at €0.

Once again, he was on to something because just a few days later, the FT first reported that the bank which was this close to nationalization in 2016, and failed to consummate a merger with that "other" German bank, Commerzbank, was preparing to roll out Plan Z: amid a deep overhaul of its trading operations (read: mass terminations), the biggest German lender was set to roll out a "bad bank" holding some €50 billion in legacy toxic derivative assets, a plan that was quite popular in the depths of the global financial crisis.

As we noted at the time, it would hardly come as a surprise that the German bank best known for housing €43.5 trillion in gross derivatives notional (something we first pointed out way back in 2013)...

.. would stuff its "bad bank", known internally also as "the non-core asset unit", with - drumroll - long-dated derivatives.

More to the point, we said that while this "bad bank" plan was commendable - after all admitting you have a problem is the first step toward recovery - it would fall far short of what is necessary to be ring-fenced from DB's legacy balance sheet.

Today, Bloomberg confirmed as much when it reported that just two weeks after the original, €50 billion bad bank plan was floated, the German bad bank's bad banks has already grown by 60%, with about €75 billion "and maybe as much as 80 billion euros of risk-weighted assets will form the basis of bad bank", a Bloomberg source said.

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