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Deutsche Bank’s Woes May Be ‘Insurmountable,’ Berenberg Says

Deutsche Bank AG is stuck in a vicious circle as co-Chief Executive Officer John Cryan seeks to overhaul an impaired business that needs more capital, which the bank would struggle to raise if it tried to tap investors, according to Berenberg.

The Frankfurt-based lender’s biggest problem is excessive leverage, Berenberg’s James Chappell wrote Monday in a note that said the bank faces “insurmountable headwinds.” He cut his rating to sell from hold and reduced his target price for the stock to 9 euros per share, the lowest among more than 30 analysts tracked by Bloomberg and about 40 percent below current levels.

While Cryan, 55, has scrapped dividends, earmarked businesses for sale and pledged to eliminate thousands of jobs, Deutsche Bank earnings have been undermined by 12.6 billion euros ($14 billion) in costs linked to past misconduct. Efforts to sell assets may be hampered by illiquid credit markets, while Cryan will also struggle to boost capital as the investment-banking industry is in “structural decline,” Chappell wrote.

“It’s hard to see how Deutsche Bank can escape this...