In order to give themselves a boost in their liquidity, many large banks are now writing down their bad credit mortgages. Deutsche Bank in particular wrote off $4 billion in bad credit mortgages and may continue the trend in the next quarter. The company did see their shares increase in response to the move. This markdown is the first acknowledgement from the banking giant that they had issues with their bad credit mortgages and many see this as a sign that the bank is ready to fix the problems.”Conditions have become significantly more challenging during the last few weeks,” Deutsche Bank said. “Reflecting this environment, Deutsche Bank anticipates in the first quarter 2008 markdowns in the region of €2.5 billion, related to leveraged loans and loan commitments, commercial real estate and residential mortgage-backed securities.”"There is little indication that the credit crisis is over and, as a result, a number of banks will be forced to start liquidating their credit positions, putting even further pressure on the market,” stated Octavio Marenzi who works for a French financial consulting firm. “For the rest of 2008, the risks for the banking industry are accumulating, especially for those firms, such as Deutsche Bank, with significant exposure to the U.S. markets.”
Related reading: Bright Light
Comment on this article