Three awful announcements of new losses from Bank of America, Royal Bank of Scotland and Deutsche Bank cratered bank share prices in the US, UK and continental Europe in January. The sheer scale of the loss at RBS plus the talk of looming full nationalization and the unseemliness of the circumstances at Merrill Lynch diverted attention from Deutsche Bank. But its losses are perhaps the most disheartening of the three.
By the low standards of a humbled industry, Deutsche Bank had had a good credit crunch until its January update on the fourth quarter of 2008. It had spotted the sub-prime mortgage crisis early in 2007, avoided the worst itself and even won plaudits for advising clients of the dangers. True, it had stored up problems in...
