Deutsche Bank problems eat away at STI's gains
EIGHT years after the US sub-prime debacle, its effects are still being felt, this time in the form of worries that Germany's Deutsche Bank could, because of its role in selling junk mortgages that led to the 2008s crisis, go belly-up and trigger a repeat meltdown of the financial system.
On Friday, news that hedge funds have reduced their exposure to Deutsche Bank brought pressure to bear on all regional markets and cancelled out gains earlier in the week that came from an oil price surge and the first US presidential debate, which appeared to have been won by the Democratic candidate Hillary Clinton.
The hedge fund withdrawal came after a report earlier last month that the US Justice Department has ordered Deutsche Bank to pay US$14 billion in fines for the latter's role in the sub-prime fiasco. Although that fine will very likely be reduced after appeals and negotiations are concluded, the development sent the bank's shares crashing.
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