Deutsche Bank shares hit record high, UBS downgrading shares to "sell"

Deutsche Bank shares reached a record low on Monday, down nearly 3% after UBS degraded the German lender's shares to a "sell" rating of "neutral".

Echoing difficult external events and the low interest rate environment, UBS lowered its price target for Deutsche from € 7.80 to € 7.75 to € 5.70.

"We are downgrading to sell because we do not expect an immediate improvement in operating conditions." Deutsche remains a leveraged market vulnerable to external events and rising rates are currently a distant hope, analysts said on Monday. d & # 39; UBS.

Rising rates are good for banks as they are able to lend money with a profitable interest rate. Lower interest rates can limit a bank's ability to make profits, which increases margins.

The German bank saw its stock hit a record low of 6,673 euros Monday morning, just days before its annual general meeting.

Earlier this month, the shareholder advisory group Institutional Shareholder Services (ISS) called on stakeholders to issue a vote of no confidence to management.

Deutsche is also under pressure from investors to reduce its investment banking division, especially after the collapse of the merger talks with Commerzbank. Investment Banking (IB) is a specific banking division related to the creation of capital for other companies, governments and other entities.

"With a stock price close to its minimum, spreads and CDS (credit default swaps) stubbornly high and a depressed profitability, we believe that it is urgent to act," he said. UBS in its note published before the fall of the stock price. On Monday.

"The IB of DB would have been a key beneficiary of an agreement with Commerzbank, to the extent that this could have helped to reduce costs and funding gaps and to balance the overall profile."

Deutsche Bank has been in the headlines for various negative reasons in recent years – from settlements with the US Department of Justice to management reshuffles, low profits, constant restructuring, speculation of merger and sharply falling stock prices.

Deutsche Bank shares are down almost 5% since the beginning of this year. The stock is down nearly 40% over a 12 month period and about 75% over a five year period.

The shares were also touched by a report published Sunday in the New York Times, according to which Deutsche Bank had ignored employee calls to report Donald Trump's transactions to a federal supervisory body.

Transactions in 2016 and 2017 triggered automated controls at Deutsche Bank to detect illicit activities. The compliance officers then prepared what they called suspicious activity reports that they thought should be sent to the Treasury, according to the Times, which quotes five current and former banks employed . But the reports have never been filed with the government, says the article.

Deutsche Bank denied this information in a statement released Monday. "At no point has an investigator been identified with a potentially suspicious activity, and it is completely wrong to suggest that anyone be reassigned or fired in order to eliminate concerns about a client. "

Trump's relationship with Deutsche Bank has attracted attention in Congress and elsewhere. Trump sued the bank last month to prevent him from complying with Congressional summonses for information on possible suspicious payments.

–Hugh Son of CNBC contributed to this report.