In a recent article it was posited by an analyst from the The Bank of America that the German bank, Deutsche Bank, has been definitively showing signs of inflated capital structure. This means the value of the bank's shares have been largely inflated, and to some extent falsified due to variables such as excessively cheap credit (due largely in part to the negative interest rates in Europe and generally low rates in other western countries). As a result it is likely the public will witness a regulatory attempt to increase capital requirements for Deutsche. Whether this attempt will be successful due to adverse reactions from special interest, time will only show.
It is important to recognize a few critical points as illustrated by this analyst. It does not seem to just be an asset risk issue, rather it seems to be the pending penalty fine as a result of the US Department of Justice case against Deutsche Bank, in the aftermath of the deflated mortgage backed securities era. In the midst of this ongoing court case, it has also just come to light that Deutsche Bank recently engaged in illegal efforts to help a top tier Italian Bank mask it's fabrication of it's financial asset book value. The bank Nomura (CEO Monte Paschi) suffered severe financial loss in the recent crisis, much like many other Italian banks. And thus made efforts to mask their losses by reporting false values on their financial statements. This was covered up via the engagement in derivatives transactions in order to increase the value of their assets.
In a recent attempt on Deutsche Bank's part to temper investor sentiment regarding the value of their securities, Deutsche manipulated the way in which they calculate their risk-weighted assets. Naturally, this can have implications not only in the amount of interest/returns yielded for the investor, but also this can affect the amount of capital required by regulators which Deutsche must meet in order to pass standards. Needless to say the bank has been engaging in risky ventures along side their ongoing case with the US DOJ. This will be an interesting case to follow in the scheme of financial market stories.
