To Buy: Commerzbank vs Deutsche Bank


In the already weakening overall market, Commerzbank (ETR: CBK) and Deutsche Bank AG (ETR: DBK) stocks were among the losers on Friday. After the rating agency Standard & Poor’s warned of the consequences of the corona crisis for the industry and lowered his thumb, current economic data seem to confirm the fears.

The mood in the German economy is worse than ever – and the prospects for employees are also clouded by the corona crisis. The Ifo business climate index fell in April by 11.6 points to 74.3 points – a new record low ( THE SHAREHOLDER reported ).

This dampens hope for a rapid recovery in the economy. Ifo President Clemens Fuest spoke of a “catastrophic” mood on the executive floors of companies: “The corona crisis hits the German economy with full force.”

This is also shown by forecasts by the Nuremberg Institute for Labor Market and Vocational Research (IAB). Their economists predict a 8.4 percent drop in economic output in Germany this year – plus three million unemployed at the top. The number of short-time workers will increase to an average of 2.5 million per year – a lonely record that far outshines the conditions of the financial crisis in 2008 and 2009.

“The German economy is plunging into the worst recession in post-war history,” says the report by the research institute of the Federal Employment Agency. It can no longer be ruled out that the current recession could turn into a global, systemic crisis. This would result in immense and long-lasting damage in the real and financial economy.

S&P warns of risks for the banks

The rating agency Standard & Poor’s (S&P) also has corresponding fears: The economic downturn will severely affect the banks in the coming quarters. The economies of Europe are “facing unprecedented challenges”. The profits, the quality of the investments and, in some cases, the capital resources of banks are therefore likely to deteriorate.

As a consequence, S&P also adjusted its assessments for the major German banks on Thursday evening. At Deutsche Bank the credit rating “BBB +” remains, but the outlook has been reduced from “stable” to “negative”.

The verdict on Commerzbank was even tougher : the rating was lowered from “A-” to “BBB +” and the “negative” outlook was confirmed. The credit ratings of the two largest German private banks are now only three levels above junk level. A negative outlook means that there is a risk of a further drop in the credit rating.

Avoid Deutsche Bank, buy Commerzbank speculatively

The Deutsche Bank share will then go down by around 5 percent on Friday. The Commerzbank share price, however, can limit the losses to around 3 percent and prevent them from falling back below the support of EUR 3.00. Speculative investors can place a position in the custody account at Commerzbank, the stop is set at EUR 2.60.