Deutsche Bank Fail Watch and Other Market Stories This Week

In terms of behemoth banks posing systemic risks, Deutsche Bank (DB) is "uber alles."

DB stock has fallen nearly 46% year to date and 88% over the past 10 years. With $42 trillion in derivatives exposure, Deutsche Bank was recently singled out by the International Monetary Fund as the bank that "appears to be the most important net contributor to systemic risks."

Boasting assets of $2 trillion, Deutsche Bank is by far the largest financial institution in Germany, with the dominant investment banking operation in Europe. It's also deeply troubled, with mounting regulatory woes that are weighing on equity markets.

How worried should you be about a global contagion along the lines of 2008? Below, we pinpoint the key events to watch in the week ahead, with advice on how you should proceed as an investor.

The German government recently denied rumors that it was discussing a rescue package with Deutsche Bank, following a request from the U.S. government that DB pay $14 billion to settle claims related to subprime mortgage-backed securities.

Attempting to allay investor concerns, Deutsche Bank last week said it would strengthen its balance sheet by selling its Abbey Life insurance business for $1.2 billion. DB management also indicated that it would be able to achieve a smaller settlement with the U.S. Department of Justice.

Investors were reassured, for now. The news drove stocks higher on Friday, with bank shares in particular rebounding from the sharp decline the day before.

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Intermediate Trade: Germany ETF