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Pro Analysis

Wall Street defends Deutsche Bank in analyst notes

A trader works on the floor of the New York Stock Exchange (NYSE) in New York, U.S., on Friday, Sept. 30, 2016.
Michael Nagle | Bloomberg | Getty Images
A trader works on the floor of the New York Stock Exchange (NYSE) in New York, U.S., on Friday, Sept. 30, 2016.

Deutsche Bank ADR shares fell 7 percent Thursday on a report some hedge fund clients reduced exposure to the bank. After the news, Wall Street cautiously defended the German lender, but spurred it to take action to shore up confidence.

Goldman Sachs said Deutsche Bank has a "substantial liquidity reserve" and hedge fund prime brokerage deposits likely represent only 3 percent of total funding for the bank.

"We believe DBK's liquidity position (2Q16) is stable — and further strengthened by ECB funding backstops, which remain available to all euro zone banks," Goldman Sachs' Jernej Omahen wrote in a note to clients Thursday.

He added: "This said, the reaction of (admittedly less liquid) the ADR to a single piece of news flow demonstrates the extent of concern in the market. As we highlighted previously, as market concerns intensify, achieving resolution to litigation, and thus capital concerns, is important."