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Eurozone Blue Chip Index Has Mercy, Spares Investors From Owning Deutsche Bank

At this point, it’s basically a human-rights violation to do so.
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Who would want to own stock in Paul Manafort’s preferred international banking partner? A company whose challenge-to-opportunity ratio is essentially undefined? And can’t afford fruit, let alone having employees travel further than Wiesbaden or, you know, paying their far-too-large number? A company that can’t even fire and replace its hapless CEO without underlining its utter incompetence, and when its occasional competence is noted, it is for doing something illegal? A bank that can’t pass a test that was essentially designed to be impossible to fail? The answer, of course, is no one, which is why Deutsche Bank shares have been cratering for more than a decade and still look expensive. And yet, the bank’s neighbors at Deutsche Börse have continued to force this portfolio poison down investors’ throats by allowing the bank to remain in the Euro Stoxx 50 Index, a violation of both common sense and probably the Geneva Convention.


Well, no more! Whatever frostiness it may bring to gatherings of Frankfurt financial types, the Börse is giving up the pretense that the Bank belongs in a top 50 of anything. Passive investors, rejoice! You can once again safely park your money in a blue-chip Eurozone index that is made up entirely of actual blue chips—like Bayer and BNP Paribas and SocGen and Volkswagen—without worrying about the next headline reading “Deutsche Bank Is Welcoming BJs.”

Germany’s largest lender has dropped out of the Euro Stoxx 50 index for the first time since its inception in 1998….

Stocks dropping out of a benchmark index on average have underperformed the respective gauge by 5.6 percent during the month before the announcement and another 3 percent between the announcement and the actual index change, data collected by LBBW analyst Uwe Streich show. Streich said the main problem for the bank was “reputational.”

“Exiting the Euro Stoxx 50 seems to contradict the bank’s self-image as one of the euro zone’s biggest banks,” he said. “Re-entry will be very difficult.”

Deutsche Bank Is Said to Be Removed From Euro Stoxx 50 Index [Bloomberg]
SocGen expects around $1.27 billion in U.S. sanctions penalties [Reuters]



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