Deutsche Bank stock tumbles

be report on U.S. business activity. Shares of global giant Deutsche Bank dropped today, reigniting concerns over the stability of the banking industry. KTVU's Jana Katzema spoke with a Stanford Finance Professor about the potential impact. Jana. Julia, it's still unclear whether today's sell-off was due to investor jitters or specific concerns about Deutsche Bank.

But one Stanford professor who has done extensive research on Deutsche Bank says it does raise some important questions about the levels of risk that many of these global giants have been taking in their investments. Concern over global financial giant Deutsche Bank led to a sharp drop in stock prices Friday. Shares closed down 8.5% after falling as much as 14%. Following a European Union summit in Brussels Friday, German Chancellor Olaf Scholz spoke about Germany's largest lender. The Deutsche Bank has the basic principles. He said, quote, there is no reason to worry.

Deutsche Bank has thoroughly modernized and reorganized its business and is a very profitable bank. Deutsche Bank has turned in 10 straight quarters of profits. But there is concern about exposure to high-risk investments according to Stanford Finance Professor Anat Admadi. The banking system is just very, very large. And because it's large, there are only so many opportunities. So it ends up being very competitive. And the only way to get ahead is just to take a lot of risk.

Admadi says the underlying concerns about credit Swiss and Deutsche Bank differ from the recent troubles of the smaller US banks, First Republic, Silicon Valley Bank, and Signature Bank, which were closely linked to US interest rate hikes. Deutsche Bank and Credit Swiss, they're a different animal because they are very global, very, very large, and very what they call systemic, meaning very connected to a lot of, they have their tentacles in a lot of places. Admadi says concerns about Deutsche Bank started years ago. Deutsche Bank had legal problems, money laundering, fraud. You name it, it just had some losing businesses. They fund most of what they do overwhelmingly and in all kinds of complicated ways with debt. So they are incredibly heavily indebted.

European Union banking officials say their overall financial system is healthy due to tougher rules requiring banks to keep more cash on hand to cover deposits. But if confidence in Deutsche Bank declines, a government bailout would not fix what Admadi calls an industry in need of greater oversight. And the problem is also that when we always bail them out, we just never clean up this system. I did reach out to Deutsche Bank tonight and they replied to my email saying that they decline to comment. Reporting live, Janne Kassiama, KTVU, Fox 2 News.

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