Deutsche Bank Says Can Provide Capital for U.S. Unit
Deutsche Bank AG (DBK), Germany’s largest bank, will be able to provide the necessary capital for its U.S. business should local regulators implement stricter rules, Chief Financial Officer Stefan Krause said.
A key issue “for us will be which one of our entities that are today non-regulated might become regulated, and then we have to look into the capital position,” Krause said on a conference call with analysts and investors today. “We are confident to then be able to capitalize this position.”
Federal Reserve Governor Daniel Tarullo said last month that the central bank is planning tougher capital and leverage rules for U.S. units of foreign banks. Krause said that while Deutsche Bank looks “with quite some concern” to the U.S. and potential regulation in the country, the firm can’t yet tell what the consequences for its business will be.
The Fed will force non-U.S. firms to house all of their U.S. businesses, including securities trading, within regulated holding companies, Tarullo said Nov. 28. Those holding companies also must abide by capital and liquidity rules that already apply to U.S. counterparts, he said. That means foreign banks’ local units would have to bolster capital in the U.S. to guard against losses, regardless of their parents’ resources.
“We are very aware that there might be additional regulations coming,” Krause said. “Bear with us. We need to know these regulations in detail before we can make any substance and material statements around implications for the bank.”
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