Call it some no holds barred German bank on German bank action. After a tumultous start to a year that Germany’s largest, and judging by the tens of billions in legal settlements and charges also its most criminal bank, Deutsche Bank, would love to forget, things got worse over the weekend when a note issued by another German bank said that either Deutsche will have to massively dilute its shareholders as a result of “insurmountable” debt, or a fate far worse could await the Frankfurt-based lender.

Berenberg analyst James Chappell pulled no punches and spoke in uncharacteristically frank terms, traditionally reserves for the fringe media, when he said that “facing an illiquid credit market limiting Deutsche Bank’s (DBK) ability to delever and with core profitability impaired, it is hard to see how DBK can escape this vicious circle without raising more capital. The CEO has eschewed this route for now, in the hope that self-help can break this loop, but with risk being re-priced again it is hard to see DBK succeeding.” Chappell then broke the cardinal rule of sellside analysts: never issue a Sell rating on a fellow bank. “We downgrade to Sell and cut our price target to EUR9.00.” READ MORE