Bafin Seeks Update on ECB Rules as Deutsche Bank Plans DebtNicholas Comfort
Germany’s banking regulator said it wants the European Central Bank to provide more information on what types of debt will qualify as capital as Europe’s biggest lenders prepare to sell notes to strengthen finances.
“I hope very much that the ECB will make further announcements by year end,” Elke Koenig, president of Bafin, told reporters in Frankfurt today. “Banks want to prepare and know what the rules of the game will look like.”
European officials have entrusted the ECB with overseeing the region’s financial system to prevent a repeat of the turmoil that set off the euro area’s worst recession since World War II. Banks in the bloc, unlike competitors in Switzerland, don’t yet know what kind of debt their regulator will allow them to count toward reserves to help weather losses.
Deutsche Bank AG, Germany’s biggest bank, said yesterday that it plans to issue 5 billion euros ($6.9 billion) of debt securities through 2015 to help increase Tier 1 capital and reduce leverage.
The bank expects to “be put in a position to execute transactions” before the end of the year, Stefan Krause, Frankfurt-based Deutsche Bank’s chief financial officer, said yesterday on an earnings conference call with analysts.
“There are still many legal hurdles in individual countries,” Bafin’s Koenig said. “This is an issue you’re not going to be able to deal with definitively in two months, but hopefully we’ll see first steps.”
UBS AG and Credit Suisse Group AG, Switzerland’s biggest banks, are required to sell securities that would convert into shares or be written off if their common equity ratios fall below pre-set levels.
Koenig spoke after addressing a conference on retail banking organized by German newspaper Boersen-Zeitung today. She concluded her remarks by addressing the ECB’s plan for assuming supervision of the euro area’s biggest banks next year, which will follow a three-stage review of their assets.
“I don’t expect any giant surprises for Germany from the balance sheet assessment,” she told bankers at the conference. “Banks have prepared, they know the issues and if you’re not prepared by now, I can’t help you either.”