Deutsche Commerz-Schmerzen Come True?

We wrote about German Commerzbank last week, see here: http://thefrugalplain.blogspot.com/2009/01/nationalisation-of-commerz-schmerzen.html , and pointed out our fear about Deutsche Bank, see Reuters view here: http://www.reuters.com/finance/stocks/overview?symbol=DBKGn.DE .

And so they did it today! The stock price of Deutsche bank is down more than 6% after profit warning, pulling down the entire European financials and equity markets. Reuters report:

* Deutsche Bank has Q4 loss around 4.8 bln euros

* Sees 2008 loss of 3.9 bln euros

* Accrues funds to cover 2008 dividend of 50 cents/shr

FRANKFURT, Jan 14 (Reuters) - Deutsche Bank has racked up a loss of about 4.8 billion euros ($6.38 billion) in the final three months of 2008 alone, the bank said in a surprise profit warning on Wednesday that sent its shares tumbling.

The bank blamed troubled markets which ruined earnings at its sales and trading business, formerly the engine room of the one-time investment banking powerhouse.

In addition, it racked up losses trying to hive off risky exposure which Deutsche said now put it on track for a net loss of roughly 3.9 billion euros for last year.

The bank, originally seen as little affected by the crisis but which has been dragged ever deeper into the markets storm, said it planned a dividend of 50 cents per share for 2008.

Wait, was Germany the country that went for "mark-to-Japanese myth"? What is the result when you mark-to-something-near-reality? Note, they want to pay dividend! Well, the guys still hold the "nuclear option" in the form of liabilities that are some 20% short of German nominal GDP.

Was it Bernanke that said yesterday he sees need for additional capital injections? His speech here: http://www.federalreserve.gov/newsevents/speech/bernanke20090113a.htm.

Even more interesting is the way how they want to re-arrange the deal of Postbank. Equinet , the German partner of European Securities Network, wrote in the research note:

The facts: According to press rumours the acquisition of Postbank through Deutsche Bank will be structured in a new way. Unlike before DBK (Deutsche Bank) will pay part of the purchase price in shares (making DPW (Deutsche Post) to its new shareholder with a stake of around 10%) and will subscribe for a Postbank convertible bond that will be issued by DPW.

and

Conclusion & Action: The new deal structure is clearly very innovative but shows in our view that DBK has a capital problem. We see the new deal negatively as DBK gives up the flexibility to not fully take over DPB. The capital increase in kind will bolster DBK’s capital ratios but will have a dilutive effect. The question remains whether other capital measures (SoFFin) may have made more sense.

"The new deal structure is clearly very innovative ..."? This reminds me about the concept of "Big Swinging Dicks" and FT Alphaville has the story: http://ftalphaville.ft.com/blog/2008/11/26/18734/quant-blame-me/.

I believe it is worth re-visiting this concept ...

UPDATE 14:40 (12:40 GMT): FT Alphaville has a compilation of "Analysts: Sell DB"