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Bill shock deutsche bank bailout denials spark 2008 lehman brothers comparisons

THE German government and Deutsche Bank were at pains Wednesday to quash speculation of a rescue plan for the troubled lender, in an effort to reassure investors spooked by a potentially massive US fine.

The denials came after Deutsches share price sank to a record low this week on reports that Germanys biggest bank had asked Berlin for help after US authorities demanded an unaffordable $US14 billion ($18.21 billion) fine over the subprime mortgage crisis.

State aid is not on the table, chief executive John Cryan told Germanys biggest-selling newspaper iBild.

But investors were further rattled when news weekly iDie Zeit on Wednesday reported that German and EU officials were working on an emergency plan for Deutsche if the worst comes to the worst.

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Germanys finance ministry swiftly shot down any talk of such a bailout. The report is wrong. The government is not preparing rescue plans. There are no grounds for such speculation, the ministry said in a statement.

Reacting to the flurry of news, Deutsche Banks shares gained 2.04 per cent by close of trade in Frankfurt, ending the session at 10.77 euros ($15.71), while the DAX 30 index of leading German shares gained 0.74 per cent.

Uncertainty over the banks financial health had seen shares hit a record low on Monday, dropping 7.54 per cent to close at 10.55 euros ($15.39) and ending at the same level on Tuesday.


Deutsche has been dominating business headlines ever since the US Department of Justice (DoJ) made its demand for the eye-watering fine earlier this month.

If Deutsche is unable to negotiate the sum down to less than the $US5.5 billion ($7.15 billion) it has set aside for legal costs and fines, it could be forced to raise fresh capital on the markets, diluting the value of its shares, or weakening its balance sheet.

We expect the DoJ will treat us just as fairly as the American banks that have settled for much less in similar cases, Cryan insisted to iBild.

Eager to show investors it was working to clean up its balance sheet, Deutsche on Wednesday announced it had agreed to offload its British insurance company Abbey Life to life insurer Phoenix Group for 1.1 billion euros ($1.6 billion), which will provide a slight boost to its capital buffer.


Cryan insisted to iBild that he had at no point asked Chancellor Angela Merkel for a rescue.

But iDie Zeit is to report on Thursday on plans by Berlin if the worst comes to the worst to sell off parts of Deutsche to other financial institutions, and possibly buy a 25 per cent stake.

Some voices in the government favour involving the European Single Resolution Mechanism, set up in the wake of the financial crisis to prevent taxpayer bailouts of failing banks, the newspaper said.

In that case, creditors and customers would bear a share of the rescue costs potentially creating fresh chaos on the financial markets.

German officials believe attempting to intercede with the US authorities could be potentially counter-productive, iDie Zeit said in an extract sent out on Wednesday.

Deutsche faces further looming problems in the shape of an investigation by New York regulators into alleged money laundering at its Russian branch.

The two cases are among the most pressing of some 8000 weighing on Deutsche, and CEO Cryan has promised to resolve them by the end of the year.

The lenders woes come as European banks complain of a harsh business environment, confronting low interest rates cutting into their profit margins, anaemic economic growth, fierce competition and high requirements on the amount of capital they must hold as a buffer against future crises.

European Central Bank president Mario Draghi rejected attempts to blame him for Deutsches travails.

If a bank represents a systemic threat for the eurozone, this cannot be because of low interest rates, he told journalists in Berlin after meeting with German politicians.

In the bosss chair at Deutsche Bank for a little over a year, Cryan has launched a massive restructuring of the Frankfurt institution and plans to slash almost 9000 jobs worldwide by 2020.

Shares in the bank have lost more than half of their value since January after it booked an almost 7 billion euro ($10.21 billion) loss in 2015.

Writing in iThe Telegraph, financial commentator Matthew Lynn said the Deutsche Bank crisis could take down Chancellor Merkel and the euro.

Last October, the shares were at 27 euros. Back in 2007, they were over 100 euros, and even in the spring of 2009, when banks were crashing all across the world, they were still trading at close on 17 euros, he wrote.

For most of this year they have been sliding fast. On Monday, they crashed again, down another 6pc. Its bonds have slumped as well, while the cost of credit default swaps essentially a way of hedging against a collapse have jumped. It all has a very 2008 feel to it.

Winners in a tiz over 40m powerball jackpot

IF THE history of syndicated Lotto wins tells you anything, is that it never ends well.

Earlier this month, 14 Sydney factory workers couldnt believe their luck when they won the $40 million Powerball jackpot.

Each entrant in the syndicate was set for an impressive $2.85 million split of the total $40,445,165 prize draw.

After I checked our ticket and saw that we had all the winning numbers, the phone calls were flying around my phone was ringing like mad, the leader of the syndicate said.

Everyone was calling everyone about the win it was crazy!

Some of the syndicate members were shaking, others told me they had goosebumps. One of the guys even said his hair was standing on end and his face was tingling from the shock of it all.

But in the space of a week, that syndicate has turned sour, and one of its members has been squeezed out of the group, with lawyers for the anonymous winner claiming he had been wrongfully excluded from his share of the prize.

And now its getting ugly.

I feel betrayed that a work colleague Ive been supportive of can openly do this, said the man, who prefers to remain anonymous.

I feel let down that the other members who know I am part of the work syndicate arent willing to stand up for what is right.

If someone else was in this position I would be the first one to talk to the group, to do the right thing. I have worked with these gentlemen for five years and when theyve fallen on tough times, either at work or at home, I have supported them.

I hope that this will all be cleared up quickly and that all the members in the syndicate receive their fair share.

Details over the disagreement are slim for the moment, but Shine Lawyers told the man in question had fully paid his share of his ticket before the Powerball draw.

The ticket holder refuses to acknowledge that, a spokesperson said.

Lawyers are requesting Oz Lotteries block the payout of the winnings to the registered ticket holder until the dispute is solved.

If the registered holder of the winning ticket does receive the money from Oz Lotteries, we will require that they do not make a decision on their own as to how that money is paid out. The winnings need to be frozen until the dispute is resolved.

As anyone can imagine, losing a rightful share of $40 million would be devastating. To see this life changing event slip through our clients fingers is unacceptable. Its only fair and just to make sure the winnings are paid to the right people in the right amounts, Shine Lawyers NSW Commercial Litigation and Insolvency Practice Leader Luke Whiffen said.

The group have until May 19 before the winnings are released.

Earlier this month, the syndicate leader said he was excited to be sharing it with his work colleagues because theyve all been working hard and putting in long hours to earn some extra money for their families.

The leader also went on to say that while they would personally be retiring off the back of the win, they werent sure of what everyone else in the group had planned.

So what exactly happened? Stay tuned ...

Last year, Geelong man Gary Baron allegedly made off with a $16.7 million lottery win that was supposed to be shared between 14 colleagues.

The Geelong courier who hit the jackpot by winning a $16.7m Powerball draw has struck a deal with the co-workers who had been in a lottery syndicate with him./p