That's what happened with Deutsche Bank, when as we reported two weeks ago, the quant fund pulled its cash from Deutsche Bank as a result of soaring counterparty risk, just days before the full - and to many, devastating - extent of the German lender's historic restructuring was disclosed, and would result in a bank that is radically different from what Deutsche Bank was previously.
In any case, now that RenTec is long gone, and questions about the viability of Deutsche Bank are swirling - yes, it won't be insolvent overnight, but like the world's biggest melting ice cube, there is simply no equity value there any more - everyone else has decided to eliminate their counterparty risk as regards DB, and according to Bloomberg, clients of Deutsche Bank, mostly hedge funds, have started a "Bank run", one which has culminated with about $1 billion per day being pulled from the bank.
As a result of the modern version of this "Bank run", where it's not depositors but counterparties that are pulling their liquid exposure from DB on fears another Lehman-style lock up could freeze their funds indefinitely, Deutsche Bank is considering how to transfer some €150 billion of balances held in Deutsche Bank's prime-brokerage unit - along with technology and potentially hundreds of staff - to French banking giant BNP Paribas.
The problem, as Bloomberg notes, is that such a forced attempt to change prime-broker counterparties, would be like herding cats, as the clients had already decided they have no intention of sticking with Deutsche Bank, and would certainly prefer to pick their own PB counterparty than be assigned one by the Frankfurt-based bank.
Alas, the problem for DB is that with the bank run accelerating, pressure on the bank to complete a deal soon is soaring.
To be sure, Deutsche Bank's hedge fund balances have been declining throughout the year as speculation swirled around Sewing's intentions for the prime brokerage, but the rate of redemptions was far lower than $1 billion per day.
Now that the bank jog has become a bank run, the next question is how much liquidity reserves does DB really have and what happen if hedge funds clients - suddenly spooked they will be the last bagholders standing - pull the remaining €150 billion all at once.
https://www.zerohedge.com/news/2019-07-16/bank-run-deutsche-bank-clients-are-pulling-1-billion-day
In any case, now that RenTec is long gone, and questions about the viability of Deutsche Bank are swirling - yes, it won't be insolvent overnight, but like the world's biggest melting ice cube, there is simply no equity value there any more - everyone else has decided to eliminate their counterparty risk as regards DB, and according to Bloomberg, clients of Deutsche Bank, mostly hedge funds, have started a "Bank run", one which has culminated with about $1 billion per day being pulled from the bank.
As a result of the modern version of this "Bank run", where it's not depositors but counterparties that are pulling their liquid exposure from DB on fears another Lehman-style lock up could freeze their funds indefinitely, Deutsche Bank is considering how to transfer some €150 billion of balances held in Deutsche Bank's prime-brokerage unit - along with technology and potentially hundreds of staff - to French banking giant BNP Paribas.
The problem, as Bloomberg notes, is that such a forced attempt to change prime-broker counterparties, would be like herding cats, as the clients had already decided they have no intention of sticking with Deutsche Bank, and would certainly prefer to pick their own PB counterparty than be assigned one by the Frankfurt-based bank.
Alas, the problem for DB is that with the bank run accelerating, pressure on the bank to complete a deal soon is soaring.
To be sure, Deutsche Bank's hedge fund balances have been declining throughout the year as speculation swirled around Sewing's intentions for the prime brokerage, but the rate of redemptions was far lower than $1 billion per day.
Now that the bank jog has become a bank run, the next question is how much liquidity reserves does DB really have and what happen if hedge funds clients - suddenly spooked they will be the last bagholders standing - pull the remaining €150 billion all at once.
https://www.zerohedge.com/news/2019-07-16/bank-run-deutsche-bank-clients-are-pulling-1-billion-day
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