Proposed Rule for Foreign Banks is Response to German Bank’s Negative Capital in U.S.
Comments supporting the Federal Reserve’s proposed rule for foreign banks were submitted today by UNITE HERE. The largest of the foreign banks affected by this Proposed Rule is Deutsche Bank AG. “We believe the German lender’s longstanding capital and liquidity issues pose a real risk to the global financial system, and that the Proposed Rule would significantly mitigate that risk while restoring competitive equality between foreign banks and domestic competitors,” said Marty Leary and Meredith Schafer in the letter to the Federal Reserve. The complete comment on the Proposed Rule can be read here. In addition, thousands of people from Hawaii to Boston have written to the Federal Reserve supporting the proposed rule and highlighting Deutsche Bank’s too-big-to-fail status. German regulators in particular have helped create the conditions necessitating enhanced prudential standards in the U.S. through resistance to higher capital and liquidity standards in the Basel discussions. Deutsche Bank’s U.S. subsidiary... {read more}
When will Deutsche Bank stop frittering away its capital?
Last week, an article by Antoine Gara in The Street.com argued that Deutsche Bank should cut its planned dividend payments for 2013. Recall that the bank has set a payout of €.75 per share, which the article notes exceeds the bank’s profits last year. Meanwhile, the bank’s recent earnings revision, which came about as a result of its decision to set aside an additional € 600 million for anticipated settlements of mortgage litigation and the Iran sanctions and LIBOR investigations, caused the Tier 1 capital ratio to fall from 8.0% to 7.8%. According to Gara: Although Deutsche Bank could have minimized the capital hit of its earnings revision by cutting the dividend, the bank remains committed to a payout that would be unlikely to pass the Federal Reserve’s muster in the United States. Deutsche Bank’s rising legal costs and signs that regulatory probes may soon hit the bank’s pocket book... {read more}
New FBO rules impact on DB: No Big Deal?
During its January 31st earnings call, the bank seemed to want it both ways—objecting strongly to the imposition of the new FBO rules requiring more capital in the U.S., and yet downplaying the bank’s need to move or raise capital. From transcript of the call: Jernej Omahen, Goldman Sachs analyst: The first question I’d like to ask relates to the Fed proposal. And I have to say so, and maybe it’s me, but I’m just confused because I don’t understand whether Deutsche Bank believes this is a big deal or whether you think it’s not a big deal. Because on the one hand you’re telling us we won’t have to raise any capital as a consequence of this, it’s not going to have a meaningful impact on our operations, and on the other hand you’re telling us this is such a big deal that it’s going to spike retaliation from European... {read more}
Poll: Should Deutsche Bank consent to the release of BaFin’s LIBOR probe results?
This month BaFin will complete its probe of LIBOR rate-rigging allegations at Deutsche Bank. Opposition party politicians in Germany have asked BaFin to release the results of its investigation into Deutsche Bank’s alleged role in the LIBOR rate-rigging scandal. BaFin claims that under German bank secrecy law it is unable to release the investigation without the bank’s consent. {read more}
