Deutsche Bank May Be Top Contributor to Systemic Risk, IMF Says

Deutsche Bank AG, which runs Europe’s biggest investment bank, may be the biggest contributor to systemic risk among the largest lenders, according to the International Monetary Fund.

Deutsche Bank “appears to be the most important net contributor to systemic risks” among global systemically important banks, or G-SIBs, the Washington-based IMF said in a report Wednesday. HSBC Holdings Plc and Credit Suisse Group AG are next in the ranking, according to the IMF.

Global regulators have sought to avoid a repeat of the taxpayer-funded bank bailouts of the 2008 financial crisis by holding lenders to stricter capital requirements that encourage them to become smaller and less complex. Concern over Frankfurt-based Deutsche Bank’s financial strength has weighed on the company’s stock and make it the worst-valued global lender.

“The relative importance of Deutsche Bank underscores the importance of risk management, intense supervision of G-SIBs and the close monitoring of their cross-border exposures, as well as rapidly completing capacity to implement the new resolution regime,” the IMF said in the report.

Deutsche Bank currently exceeds its capital requirements and is shrinking its balance sheet to comply with regulations as they become stricter.

"In particular, Germany, France, the U.K. and the U.S. have the highest degree of outward spillovers as measured by the average percentage of capital loss of other banking systems due to banking sector shock in the source country," the IMF said.

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