Deutsche Bank plans restructuring to dodge US regulations

Author thumbnail
13 Apr, 2011 Updated Wed 13 Apr 2011 11:58 CEST
image alt text

Germany's biggest bank, Deutsche Bank, plans to restructure its US operations to sidestep new regulations that could have forced it to raise billions in new capital, a report said Wednesday.

The Wall Street Journal reported that the bank wanted to operate with a thinner capital cushion than the new rules envisioned.

When contacted by the news agency AFP, Deutsche Bank declined to comment.

Deutsche Bank executives feared the bank would have to put up as much as $20 billion in new capital to offset losses in its US unit that have left it undercapitalised, the newspaper said, citing an internal company document.

The bank worried such a move would have hit its own capital levels. The restructuring would see its Taunus Corp holding, with some $373 billion in assets, become a simple subsidiary of its parent company while maintaining the same activities, sources told the newspaper.

Deutsche Bank is the second major European bank to engineer such a move after Britain's Barclays changed the status of its US bank holding company to erase a capital shortfall possibly in excess of $12 billion, the paper said.

For the past decade, the Federal Reserve has not required the US arms of foreign banks to meet the same capital requirements as US banks, so long as their foreign parent companies are financially healthy.

But the Dodd-Frank Act, which became law in 2010 in response to the global financial crisis, closed that loophole, effective in 2015, the Wall Street Journal said.




2011/04/13 11:58

Please keep comments civil, constructive and on topic – and make sure to read our terms of use before getting involved.

Please log in to leave a comment.

See Also