tyb
patterns all over changing, frens in that neck o the woods said same thing last week.
even where I live it's been better, socal-sd. Not lately as really humid but it had been cooling off at night and that has not habbened in July for over 10 plus yrs. Sucky here now but I'm also not on the coast. Spraying came back today too.
Deutsche Bank pegs its derivatives exposure at about $22 billion — and faces challenges in shedding those assets
Earlier this week Deutsche reported a $3.5 billion loss for the second quarter, including restructuring charges that will see 18,000 of the bank’s 91,000 staff laid off.
However, putting a value on the complex derivative contracts that Deutsche wants to auction off is a moving target at best, say experts.
It's actually very simple, get your input prices from market sources and you have it's real value…..
If all goes as planned, Deutsche Bank pegs its own exposure to its derivatives book at around $22.3 billion (€20 billion), according to recent estimates viewed by MarketWatch.
But even a small miscalculation on derivatives contracts can pose big problems if the assumptions used to underwrite agreements get the risks wrong.
Parties to derivatives contracts often have multiple bets going simultaneously with a particular counterparty.
In Wall Street parlance, the concept is called “netting,” and, in theory, downside on one trade could be canceled by a win on another.
Netting creates an ability to offset amounts owed between parties under a master agreement, explained James Lovely, a Florida-based consultant to hedge funds and counterparties to derivatives contracts. The resulting exposure is often further mitigated by collateral being held by the party owed the net amount.
“But that assumes that counterparties perform, that clearinghouses perform and the collateral you have is adequate,” Lovely said in an interview. “If you ever, God forbid, had a full blow-up by Deutsche Bank, it is like being in a boat that does fine in 10-foot seas — and there is a 100-foot tsunami.”
To be sure, a failure of Deutsche Bank is viewed as unlikely, particularly since it is considered central to Germany’s banking system.
For its part, in March, Deutsche Bank reported that its derivatives book was mostly tied to interest rates and currencies, with equities and potentially worrisome credit exposure making up a much smaller portion.
Another mitigating factor for Deutsche Bank is that most of its derivatives contracts mature within a year, according to its annual report, which could lead to a sizable reduction of the portfolio in the near term. But, as Reuters reported on Tuesday, the bank’s longer-dated interest-rate and credit derivatives could be harder to unload.
Deutsche Bank declined to comment on its plans for its derivatives platform, beyond recent public statements and filings concerning its restructuring.
Since the restructuring announcement earlier this month, hedge funds have been withdrawing assets and, sometimes, entire books of business from Deutsche Bank. About $1 billion in assets per day had been pulled from the platform since its July 7 restructuring announcement, according to a person familiar with the matter.
Deutsche Bank expects to emerge from its restructuring — its most expansive in decades — in 2022 at a cost of about $8.2 billion (€7.4 billion).
Meanwhile, rules introduced since the 2008 crisis, designed to make financial markets fairer and more transparent could make it harder for Deutsche Bank to shed its prime brokerage.
Rules for higher margins or collateral for funds that use over-the-counter derivatives, rather than those cleared through a third-party exchange, are already being phased in. The final stage of the implementation of these rules, which impact smaller funds, has been extended by a year to September 2021, according to the industry publication the Trade.
Another complicating factor is that the scandal-plagued Libor, or London interbank offered rate, used as a benchmark for pricing interest-rate-pegged contracts, is being phased out, making valuation of existing derivatives contracts difficult in the future, experts have said.
An estimated $200 trillion in financial contracts and securities, which includes derivatives, continue to rely on Libor.
https://www.marketwatch.com/story/deutsche-bank-pegs-its-derivatives-exposure-at-about-22-billion-and-faces-challenges-in-shedding-those-assets-2019-07-26
It's MUCH higher as when they swap these derivative contracts back and forth they book the full profit on the life of the contracts upon receiving them.'
DB has also played the mark-to-model game on these too. Assigning a value to them based on internal un-audited models that do not factor in real prices on exchanges or mark-to-market.
So you have the creator, DB only having a smaller amount of 'exposure' based on the swapping of these amongst other banks and institutions of the world (see Cap#4) and they house what they hold in the 'bad bank'.
If you believe the amounts of their exposure to be that low then I have some things I would like to sell to you.
not safe for him with large crowds in SF and LA. The only place he has been is bases, outside of the travel for the fires. Reason for that.