Deutsche Bank co-CEO John Cryan rushed Tuesday to reassure investors and staff on the bank's stability, saying that the lender remained "absolutely rock-solid" and that he did not share the market's concern over the adequacy of its balance sheet.
Investor concerns over the health of Europe's financial sector have ramped over the past week, with Deutsche Bank selling off sharply as market-watchers detailed concerns over energy sector exposure and a possible cash crunch.
"Second, we are investing in bringing on board some talented senior bankers into Corporate & Investment Banking. Third, we are investing in client-facing technology, particularly in our retail banking and asset management businesses."
Cryan said he was also "personally investing time" to resolve successfully and speedily open regulatory and legal cases.
"I want to remove the uncertainty among staff and in the market that these cases cause," he said.
"We will almost certainly have to add to our legal provisions this year but this is already accounted for in our financial plan," Cryan added in the message sent out to employees.
Cryan's comments failed to soothe investor nerves, however, with shares in the bank falling towards the bottom of the DAX, down 4.5 per cent. Fellow German lender Commerzbank tumbled to the bottom of the index, sinking over 5 per cent.
Deutsche Bank had already stressed Monday that it had "sufficient" reserves to service its so-called tier 1 debts, or its most junior bonds.
But this did not stop the cost of insuring the debt of Deutsche Bank using credit default swaps (CDS) from spiking, surging over 200 basis points on Monday, widening further than at any point during the financial crisis in 2008.
"The price of Deutsche shares appear to be pricing in significant recapitalization, which I don't expect to happen. The credit market response, rise of the CDS is bringing back memories of 2009, which is driving equities prices, but this time is different when you look at asset quality and capital ratios which are so much stronger than they were seven years ago," head of European banks research at Nomura, Jon Peace told CNBC Tuesday.
"Deutsche has been singled out a bit, profitability is suffering and it is difficult to quantify tail risks as it related to litigation. Management has a de-leveraging plan in place, completing the picture now by reducing assets, but we just haven't seen much of that benefit come through yet. Markets are very impatient. They need to get on with deleveraging as quickly as they can and shrink the tail risks as quickly as they can," he added.
Late last month, Deutsche Bank reported a fourth-quarter net loss of 2.1 billion euros and full-year net loss of 6.8 billion euros on Thursday, which followed a warning last week that it would post a 2015 net loss of approximately 6.7 billion euros (S$10.5 billion).
"We are coming back from a humongous loss position, if we turn this around over the next two years - and we said that 2018 will be the first "clean" year, if we really make that work and achieve our targets, then I think this is a very attractive place to be," chief financial officer Marcus Schenck told CNBC.