Posts tagged "Basel III"
New FBO rules impact on DB: No Big Deal?

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}
Stop us before we model again:  Is aggressive RWA modeling undermining Basel’s legitimacy?

Stop us before we model again: Is aggressive RWA modeling undermining Basel’s legitimacy?

Some might argue Basel standards were intended to make life easier for “universal” banks like Deutsche Bank—creating common standards across borders for global businesses.  And according to Chris Whalen of Institutional Risk Analytics, the Basel III standards have had another, more direct, benefit for “the hopelessly insolvent” DB: “If you measure the tangible equity of the entire DB group vs. total assets, what is known as a leverage ratio, the bank has lower capital than any large US bank. Only the canard of capital to “risk weighted assets” brought to us via Basel III allows DB to keep operating.” According to Dominic Elliot of Breakingviews, published in in The New York Times Dealbook, DB’s  “fancy footwork” (i.e. changes to their internal RWA models) accounted for a quarter of the reduction in risk-weighted assets announced during the bank’s January 31st analyst call.  But is it possible the bank’s creative RWA modeling... {read more}
Sheila Bair: In resisting stronger capital rules, German bank regulators used “tactics reminiscent of those used by segregationists” opposed to civil rights in the U.S.

Sheila Bair: In resisting stronger capital rules, German bank regulators used “tactics reminiscent of those used by segregationists” opposed to civil rights in the U.S.

  “Our most important relationship is with our regulator—guess where I was this afternoon?” — Anshu Jain, quoted in The Economist, 1/24/13 In a previous post, we commented on Federal Reserve Governor Dan Tarullo’s understated view that the “likelihood that some home-country governments of significant international firms will backstop their banks’ foreign operations in a crisis appears to have diminished.” {read more}
Asset Management Sale Won’t Solve Capital Concerns

Asset Management Sale Won’t Solve Capital Concerns

As regular readers of our page well know, Deutsche Bank faces a serious capital shortfall. Let’s review just a few of the reasons: In order to meet European Banking Authority requirements, Deutsche will have to raise over €3.2bn by June. In order to fulfill Basel III SiFi requirements, Deutsche will need to raise more than €12bn by 2016. {read more}