Germany’s financial markets regulator said a U.S. plan requiring local units of foreign banks to be separately capitalized hampers global regulators in their efforts to coordinate policy.
“It’s a step backward,” Elke Koenig, Bafin’s president, said yesterday on the sidelines of a conference in Frankfurt. “Basel III is a consolidated system and such a unilateral decision goes in the wrong direction,” she said referring to capital rules from the Basel Committee on Banking Supervision.
In November, Federal Reserve Governor Daniel Tarullo proposed ordering 23 foreign banks to adhere to stricter capital requirements to reduce risks to the financial system. Germany’s biggest bank may need to transfer more than $13 billion to meet the planned rules, Goldman Sachs Group Inc. said today, cutting the company to sell from hold.
Koenig also said that the U.S. calling on banks to prepare for a lack of coordination between regulators in the event of defaults under so-called living wills “went in the wrong direction.” Bafin and global peers should cooperate on making the finance industry more stable, she said.
Co-Chief Executive Officer Anshu Jain said in January that he wants to be “very focused on the U.S.” because of its economic prospects and the presence that Deutsche Bank has built there.
Deutsche Bank, the least capitalized of Europe’s four biggest investment banks, has narrowed the gap to its peers by building reserves without diluting the holdings of owners with a share sale. Jain said he can’t rule out such a sale should regulation tighten.