{"id":96597,"date":"2026-10-27T08:17:24","date_gmt":"2026-10-27T08:17:24","guid":{"rendered":"https:\/\/www.taxresearch.org.uk\/Blog\/?p=96597"},"modified":"2026-10-27T08:17:24","modified_gmt":"2026-10-27T08:17:24","slug":"is-deutsche-bank-sending-out-the-signals-that-indicate-a-coming-crisis","status":"publish","type":"post","link":"https:\/\/www.taxresearch.org.uk\/Blog\/2026\/10\/27\/is-deutsche-bank-sending-out-the-signals-that-indicate-a-coming-crisis\/","title":{"rendered":"Is Deutsche Bank sending out the signals that indicate a coming crisis?"},"content":{"rendered":"

On 9 August 2007<\/span>, BNP Paribas announced that it had suspended withdrawals from three investment funds, effective from 7 August<\/p>\n

The funds held securities linked to American subprime mortgages. BNP Paribas explained that trading in these securities had effectively ceased, making it impossible to establish reliable valuations.<\/p>\n

Why mention that? That is for two reasons.<\/p>\n

The first was that this was the first sign that a global financial crisis was coming. The market was becoming so disorderly that valuations could not be established, but more importantly, BNP Paribas could not sell the mortgage securities it held to meet investor demand for cash.<\/p>\n

The second is that the FT has reported today<\/a> that:<\/p>\n

Deutsche Bank\u2019s asset manager DWS has said it will honour just 10 per cent of withdrawal requests from its flagship property fund starting on Tuesday, as falling real estate prices intensify pressure on the \u20ac100bn German property fund industry.<\/p>\n

The \u20ac4.3bn \u201cGrundbesitz Europa\u201d fund, the biggest of three DWS open-ended property funds, would cancel 90 per cent of each investor\u2019s redemption requests, DWS said on Monday as it seeks to preserve liquidity.<\/p><\/blockquote>\n

Are the two issues exactly the same? No, of course they are not, but there are sufficient similarities to be worried.<\/p>\n

An investment fund that thought it could offer savings opportunities backed by particular property-based assets has now restricted savers' ability to withdraw their money because the fund is sufficiently illiquid due to what must be market failure that the bank can no longer afford to give those who have saved with it access to their money.<\/p>\n

The details might differ from 2007, but the substance does not. A bank-managed fund's refusal to pay is always significant and signals serious underlying market-failure issues.<\/p>\n

In 2007, we ended up with a global financial crisis because the mortgage securities BNP Paribas traded were seriously overvalued.<\/p>\n

Deutsche Bank's signal now is that some property markets have, at the very least, become so illiquid that it cannot sell properties to meet demand for funds.<\/p>\n

History never repeats itself exactly, and I am not saying these two events are identical, because they are not. However, are they sufficiently similar to worry about? In that both represent the existence of seriously illiquid markets that are creating significant financial stress, as a consequence of which the relationship of trust between investors and a bank will fail, they share so many characteristics in common that the comparison has to be made.<\/p>\n

I am not saying, at this moment, that this signals the start of the next financial crash. That can only be stated in retrospect. That this event provides yet another warning of the risks that we face is undoubtedly true.<\/p>\n

Nothing that I am seeing at present provides me with any optimism as to the economic prospects for much of the world in 2027. In that case, if you have the opportunity and the means to do so, this is the moment to think about safety.<\/p>\n","protected":false},"excerpt":{"rendered":"

On 9 August 2007, BNP Paribas announced that it had suspended withdrawals from three investment funds, effective from 7 August The funds held securities linked
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