Global Systemically Important Banks (GSIBs) have vast exposure as counterparties to post-Herrhausen Deutsche Bank’s huge derivatives portfolio, and will incur sweeping losses if Deutsche Bank defaults.

Schiller Institute chairwoman Helga Zepp-LaRouche has made an urgent call for Deutsche Bank to be saved with a one-time financial infusion, and be reorganized to return to its original function as an exemplar of the German industrial bank, whose major purpose was to make low-interest loans for long-term global physical infrastructure building. This was exemplified in Alfred Herrhausen’s program to issue such loans to rebuild Poland in 1989.

Today, if Helga Zepp-LaRouche’s urgent proposal is not taken up, not only will Deutsche Bank fail, but widespread financial carnage will result in Europe, Asia, and the U.S. banks, and some will not survive.

A diagram in ZeroHedge, based on the June 30 IMF Report which called Deutsche Bank the most systemically risky bank, quantifies the exposure to Deutsche Bank’s risk, of banks on three continents, as highest, higher, and high, as follows:

* In Asia, most exposed to potential Deutsche bank defaults are, with largest exposure, Industrial and Commercial Bank of China, China Construction Bank, Mitsubishi; medium exposure: Bank of China, Sumitomo, and Mizuho Banks.

* In Europe, the largest exposures to Deutsche Bank are: HSBC, BNP Paribas, Barclays; medium exposure: Santander, Societe Generale, Credit Agricole, Royal Bank of Scotland, and Credit Suisse

* In the United States, the largest exposure is JPMorganChase; medium exposure: Citibank, Wells Fargo, Goldman Sachs, Morgan Stanley; and lesser exposure: Bank of NY Mellon and State Street Bank. 

The net profit of Germany’s biggest bank is down to almost zero: in the second quarter of this year, the bank made only EU18 million of profit. In the same quarter a year ago, it was EU796 million. This implies a loss in profits within one year by 97.5%.  At the Frankfurt exchange this morning, Deutsche Bank’s shares dropped by 6%.

In the first quarter of 2016, the bank still made a net profit of  EU236 million; against that, Q2 brought a loss by 94%. The sector “global markets” had most of the losses in Q2 with 28%, followed by asset management with -18% and other wealth management with -12%; the only profitable sector was Postbank, with a net profit of 13%.

The said Q2 mini-profit, however, is due to relatively low legal expenses of EU120 million from April to July; a year ago, the bank had to shoulder EU1.2 billion during the same period. CEO John Cryan, a British banker from the investment branch, said he is content with the performance of the bank to the extent that it is going through a “rather difficult period,” but he did not give any indication that a fundamental change of strategy is considered. Should the bank’s performance not improve, even more streamlining and cost-cutting would be on the agenda, Cryan said in the context of the Q2 figures.

As for “Project Jade,” which, according to recent media leaks, is a new strategy of Deutsche Bank to survive by separating investment and commercial activities from each other, a bank spokesman declared: “Project Jade is not about splitting the bank. It is rather a project that has been running for quite some time, to simplify the bank as such and in its structure.” A similar denial of separation plans was made by Marcus Schenck of the board, saying in a conference call with select media this afternoon, “Some people believe that we are forced to sell Postbank in 2017, but that is not the case.”