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Deutsche Bank Shares Pop Despite Fed Stress Test Fail, But Concerns Remain

Martin Baccardax

shares posted solid early gains in early European trading Friday despite its U.S. division failing the second phase of the Federal Reserve's stress tests, a decision that will likely prevent it from paying a dividend to the parent German lender. The Fed said it had concerns with the way Deutsche Bank's U.S. division forecast future revenues in the face of a theoretical global recession, and a spike in domestic unemployment, and said there were "material weaknesses" its data capabilities and capital planning processes. "DB USA has made significant investments to improve its capital planning capabilities as well as controls and infrastructure," Deutsche Bank said in a statement late Thursday.