Germany's Nord LB Upgrades Deutsche Bank Despite "Enormous Risk"

German firm Nord LB upgraded Deutsche Bank from Sell to Hold as the bank struggles with bloated a derivatives portfolio and a 30-year share price low, according to a research note Wednesday morning. The firm raised its price target from $14 to $16. "Although the current environment for banks certainly is not ideal and continuing excessive regulation pours oil onto the fire, we do not see any substantiated reasons for the resurgence of a second systemic financial crisis," the firm wrote. "Banks are also now much more capitalized and balance sheet risks well diversified." However, the firm noted a variety of reasons for investors to worry, such as the "specter" of Deutsche Bank shareholder dilution via capital increase and a lasting flat interest rate in the European banking sector. "Despite the still enormous risk, Deutsche Bank is the German Bank for us," the firm concluded. Deutsche Bank shares were up 5 percent from market open Wednesday morning, having lost about half of their value year-to-date.