Short sellers pounds Deutsche bank amid capital flight

Deutsche Bank CEO has written a memo to employees blaming the speculators, who are looking to undermine the trust in the bank. "our bank has become subject to speculation. Ongoing rumors are causing significant swings in our stock price. ... Trust is the foundation of banking. Some forces in the markets are currently trying to damage this trust." Well, it may not to be true that the bank is in trouble due to speculating activity but it is a fact that short sellers are pounding the bank at the moment.  According to the latest data from Markit, the percentage of shares out on loan, which are basically using for short selling activities rose to 3.9 percent as of Thursday. It has been jumping higher this week. Tuesday it was just 2.4 percent and 3.1 percent on Wednesday.

The share price has dipped below €10 for the first time in more than three decades. Its coco bonds, which are considered as the riskiest forms of debt have dropped to the lowest level on record today, below 70 cents on the euro. The credit default swaps have jumped to 252 basis points.

The real risk for Deutsche bank is the loss of depositor confidence. If the depositors make a run on the bank, the bank will fail. The bank has €550 billion worth of deposits.