The man who called 'The Big Short' says Deutsche Bank is a 'problem bank'

  • Steve Eisman told Bloomberg TV that Deutsche Bank “has real profitability issues,” that it’s “probably undercapitalized,” that he thinks it will “probably raise capital again next year,” and that “it has to shrink dramatically.”
  • Eisman is famous for betting against the US housing market ahead of the 2008 subprime-mortgage crisis.

LONDON – The hedge fund manager famous for betting against the United States housing market ahead of the 2008 financial crash says Deutsche Bank is “a problem bank” that must “shrink dramatically.”

Speaking to Bloomberg TV, Steve Eisman said: “Deutsche Bank has real profitability issues. They haven’t spent money on technology in a very, very long time. They’re probably undercapitalized. I think they will probably raise capital again next year.

“Deutsche Bank is a problem bank. I think it has to shrink dramatically.”

Deutsche Bank in February reported a full-year loss of €497 million for 2017, its third straight year of losses. John Cryan was ousted as CEO in April, and his replacement, Christian Sewing, has announced plans to scale back US operations and cut jobs as a result.

Eisman was the main character in “The Big Short,” the nonfiction book by Michael Lewis about the 2008 subprime-mortgage bubble in the US. Steve Carell played Eisman in the 2015 film adaptation of the book.

Eisman, now a money manager at Neuberger Berman Group, told Bloomberg TV he thought “regulators in the United States actually a very good job postcrisis” in fixing structural issues, adding that “Europe is better, but not good enough.”

Eisman said he couldn’t comment on consolidation among European banks, though he added that there definitely would be in the US, “driven by how much companies like JPMorgan are spending on technology, which is about $US10 [billion] to $US11 billion a year, versus much smaller amounts of the regional banks.”

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