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Deutsche Bank plans restructuring to dodge US regulations

The Local · 13 Apr 2011, 11:58

Published: 13 Apr 2011 11:58 GMT+02:00

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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.

Story continues below…

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.


The Local (news@thelocal.de)

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Your comments about this article

08:55 April 14, 2011 by catjones
My country, my Rules.
01:16 April 17, 2011 by srjmsbnd
"My country, my Rules".right but not necessarily as there are many international requirements in laws and rules that Germany and Angela Merkel should not be allowed to circumvent. It is very hypocritical of Merkel to be acting in this manner while they also criticize Ireland Greece Portugal Italy Spain (etc et al) in a very despicable manner the problem with G-10 G-20 IMF is exactly what the critics have been saying the industrial world has been individually and collectively foisting their burdens on the rest of the world by use of many varied accounting finance schemes.
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