European Banking Stocks Declining on Tuesday - TheStreet

NEW YORK (TheStreet) --The stocks of several big European banks are declining on Tuesday, including Deutsche Bank (DB) - Get Report , Commerzbank (CRZBY), and Credit Suisse (CS). BloombergTV's Mark Barton was joined by European finance team leader Simone Meier on "Bloomberg Markets" this morning.

The two discussed the latest concerns regarding the health of the banking sector. They started with Commerzbank, and reports that new CEO Martin Zielke is looking to cut 9,000 jobs and suspend dividend payments.

"Commerzbank has been looking at ways to reduce costs for a while...now there is talk of roughly 9,000 job cuts. That would be about 20% of the workforce. On top of that the CEO also plans to freeze or suspend the dividend and that is obviously a massive blow for a bank that has only started paying a dividend last year for the first time since the bailout in 2008," Meier told Barton.

Moving on to Deutsche Bank, shares have hit new record lows. The bank is currently battling the U.S. DOJ over a mortgage backed securities investigation in which it has been reported the U.S. will look to impose a $14 billion fine.

Additionally, German chancellor Angela Merkel has reportedly stated her government will not bailout the bank.

"In terms of Deutsche Bank it doesn't take a whole lot for share to take another hit," Meier said. "There's obviously a lot of speculation around the DOJ, the $14 billion, will they scale it back? How much capital will Deutsche Bank have to raise?...So all these insecurities hanging over the shares.

Meier expects more downward pressure on Deutsche Bank going forward.

Barton and Meir concluded by talking about Credit Suisse and its quest for cost reductions at the global markets unit.

"Again it's a sign [of] what tremendous cost pressure these large investment banks are facing," Meier said. Management at the unit has already begun two cost structuring plans in another attempt to "fine tune" a unit that cost the company large losses earlier this year.

Separately, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:

We rate DEUTSCHE BANK AG as a Sell with a ratings score of D. This is driven by multiple weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

You can view the full analysis from the report here: DB

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