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Financial markets In which banks invest should

The view is revealed back to the debacle. Since 2007, when the share of the large German banks recorded just before the financial crisis to between highs, has lost the Deutsche Bank 91.5 percent and Commerzbank is 96.8 per cent. Once-Deutsche Bank, belonged primarily to the world market, the financial industry leaders. Twelve years later, the banks are struggling with weak Win, restructuring and problems in investment banking.

Just 16.2 billion Euro was the Deutsche Bank on Wednesday in value, and Commerzbank, only 9.2 billion. In the autumn of 2018, Deutsche Bank, flew out of the Index of the 50 most valuable companies in the Euro Zone, the Euro STOXX 50, and Commerzbank had to leave the Dax. The talks started with the merger of the two houses should be in a larger "German Commerzbank", the recovery in the Euro STOXX sure. In the case of the balance sheet total, the new Bank moved up to rank three in Europe. As measured by the market value of 25 billion euros, would remain, however, in international comparison, a dwarf. The US market leader JP Morgan Chase, for example, is on a market value of EUR 310 billion.

Harmful to the penalty interest

But the European competition is the German escaped to: BNP Paribas, is the market leader in France, is a good 56 billion euros and has earned 2018 under the line of 7.5 billion. There were three percent fewer than a year earlier, but 20 times more than in the case of the German Bank, which was recorded for the previous year, only 341 million. HSBC, a UK market leader and the largest Bank in Europe, costs in the stock market even 149 billion Euro. In the case of the Spanish Bank Santander, the largest Bank in the Euro-Zone, there are 73 billion and the Swiss UBS 40 and Unicredit's € 27 billion.

the main reasons for the weakness of the European banking sector compared to the US, especially the Zero - or even a penalty interest rate of the European Central Bank, the strong fragmentation of the European banking market and the massive regulation. Anyway, Jim Reid and Kinner Lakhani, authors of the study, "How to fix European Banking," Deutsche Bank believe. So European banks per year would have to pay an average of eight billion Euro penalty interest on their reserves, while the US banks would have received in the past year, 40 billion in interest. In addition, the U.S. financial industry benefited from reductions of a massive tax. While the United States, where interest rates are already eight times increased, hinsteuerten 2019 at a growth rate of 2.5 percent, the threat to Europe is a continuation of the zero interest rate policy. The harmonization of Japanese standards, so decades of zero interest rates and economic weakness, is also conceivable.

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Also in the future a little price potential

Anyway, the financial industry has performed across the globe in the past 15 years was significantly lower than the overall market. Thus, the Index MSCI Europe Banks between February 2004 and February 2019 has risen a total of 76 per cent, of the cross-industry MSCI Europe, however, by 226 per cent. Even in the US, where Bank shares have been claiming for the financial crisis significantly better than in Europe, was the development in the value of the total market is twice as strong as those from the financial shares. The result is that While U.S. banks are in excess of their book value record, want to pay investors for Europe's banks, on average, only half the book value. An average of all of the shares the rule is in the long term, about twice the book value.

Many analysts also see very little in the future price potential. Have reduced by 21 analysts elf to your thumb for Deutsche Bank and rates for sale, ten to a holding position, no one advises to buy. Analyst Anke Reingen from Royal Bank of Canada is about believes that a merger will lead to a "fundamentally more valuable banks, such as Unicredit, BNP Paribas or ING could in expanding their market share". NordLB cut even the rate forecast from eight to seven euros and the paper downgraded to "Sell".

At Commerzbank observers are more optimistic: Of 19 analysts see a sales position, eleven a Hold and six to buy. Christian Koch, Bank analyst of DZ Bank, thinks about that it is a merger, the market will realize that the share is too low. A buyer would get the paper is now one-third of its equity. Therefore, Commerzbank could benefit shareholders in the case of a merger of a premium to the current price. On the market, many expect that the Bank could be assessed a merger with the Deutsche Bank, about 20 percent higher.

More opportunities for American values

this would also benefit the taxpayer, because the state is involved – as one of the proponents of the merger – with 15 per cent of Commerzbank, and is located with its commitment to the Minus. Most of the industry insiders reject, however, the financial marriage. Also major shareholders of Deutsche Bank, such as Qatar or the US asset Manager, Blackrock, will see a Fusion of the Reportedly negative. The Fusion is a reality, it could be the prelude to a wave of Consolidation in Europe. Anyway the Bank market in Europe is fragmented significantly stronger than in the United States. The five largest banks hold half of all banking Assets; in the case of Europe's "Big Five" it is only a quarter. Consumers national mind in Europe, Only one percent has taken out loans with a Bank outside of its own borders, in the company of nine percent.

TRANS-national mergers would accelerate and the position of the banks in Europe to improve, so Reid and Lakhani in their study. They are also considered as drivers of share prices, so that in the case of other mergers and acquisitions is a certain upside potential for the banking sector in Europe. There are a total of alone in the Euro-Zone is about 5500 financial institutions. Also, the increasing presence of digital Bank Start-ups (FinTechs) and the digitisation of pressure could bring about merger waves in the swing. Allegedly to look for example, the Italian UniCredit and France's Société Générale also to partners.

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Fusion without any sense Together, Deutsche Bank and Commerzbank are not any better

Carla Neuhaus

More opportunities than in Europe, the majority of analysts, however, see more in American financial assets. The five largest US banks – JP Morgan Chase, Bank of America, Goldman Sachs, Citigroup, and Wells Fargo earned in 2018 of almost $ 110 billion. In Europe, only HSBC, which is to a considerable extent in the former British colony of Hong Kong to actively compete with the U.S. banks to some extent. The profit for the year Deutsche Bank, JP Morgan earned in less than a week. A 75% price increase within a period of three years, reflects your income situation. Shareholders of Bank of America earned since 2016, and even in 116 percent. Also Star Investor, Warren Buffet, has strengthened its positions in the US banking sector recently, and the strong profit situation referred to.

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