LONDON (Reuters) - Short sellers and derivatives traders are betting Deutsche Bank’s (DBKGn.DE) share price recovery will prove temporary, with data suggesting short interest in the German lender is the highest of any global bank.
Germany’s largest bank saw its shares slump to near record lows last week after a credit rating downgrade, reports the U.S. regulator viewed it as “troubled” last year and upcoming results of U.S. stress tests.
Supportive comments by European Central Bank sources on Friday have helped Deutsche shares rise 6 percent off recent lows, while the yield on its 1.75 billion-euro CoCo bond, the most junior debt category, DE107205454= has slipped 200 basis points from last Thursday’s 15-month high of 9.24 percent.
But the bank is still in the sights of short sellers, who borrow stock in order to sell it, with the aim of buying it back at a cheaper price and pocketing the profit.
Nearly $1 billion of Deutsche stock is currently out on loan - a key indicator of short interest and the highest of any global bank in dollar terms, according to data provider FIS Astec Analytics.
Deutsche is also the most borrowed stock on Germany’s blue-chip DAX .GDAX index, according to Markit, another data provider. Around 5 percent of Deutsche stock is currently out on loan, its highest level in more than a year.
Funds with short positions in Deutsche include Marshall Wace and AQR Capital Management, according to regulatory filings. Both firms declined to comment on the rationale behind the position.
Several bankers and brokers doing business with Deutsche told Reuters they were monitoring key stress indicators, especially short interest on
