Deutsche Bank may count incoming President Donald Trump among its customers, but the German bank still faces a tough crowd in the United States. Its U.S. division lagged those of Europe’s biggest lenders on a key measure of balance-sheet strength at the end of September, according to accounts published by the Federal Reserve on Nov. 15.
Deutsche already meets the minimum U.S. requirement for a 4 percent leverage ratio, which only strictly applies from the start of 2018. But on that metric – which expresses Tier 1 capital as a percentage of a bank’s assets – the likes of HSBC and UBS are ahead. Boss John Cryan has time to improve Deutsche’s position, but it won’t be easy. Adding just 1 percentage point to the ratio – which would bring the bank in line with U.K. peer Barclays – would require a little over $2 billion of capital.
Even before the detailed data dump from the Fed, Deutsche’s relationship with American regulators was tricky. They have previously taken issue with the bank’s sub-standard checks and technology systems. The pressure to play catch-up on its U.S. capital is hardly terminal. Even so, it may give Cryan extra cause to wonder whether being big across the Atlantic is worth the hassle.
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