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 The lender is expected to reduce its $400 billion balance sheet in
the United States to around $300 billion in part by reassigning
operations such as its Mexican arm and its Frankfurt and Tokyo-based
repo businesses that are currently part of its U.S. business
elsewhere, the FT reported. (http://link.reuters.com/raz96v)
The financial daily said that the bank will also reduce a sizeable
chunk of its repo business in the U.S. after discovering that some
of its clients were not making use of its other offerings.
The bank may reassign U.S.-based operations to Europe or Asia to
reduce assets in its U.S. division, the newspaper said.
Deutsche's Chief Financial Officer Stefan Krause told the FT that
the lender was confident it would be able to meet the new capital
and leverage requirements imposed on its U.S. unit.
Krause said that the balance sheet adjustment should not be seen as
a pullback from the bank's U.S. franchise, where the lender is
focused on growing its asset and wealth management business as well
as battling to regain ground lost to U.S. rivals in its flagship
fixed income arm.
Deutsche Bank plans to convert some of the existing debt its U.S.
arm owes to its German arm into hybrid debt that would convert into
equity capital under certain conditions, according to the FT.
Deutsche Bank is also hoping that the German regulator will soon
give it the green light to raise up to 6 billion euros in additional
capital through hybrid debt to help it improve its leverage ratio in
Europe, the newspaper added.
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According to the new capital rules for foreign banks announced by
the Fed last Wednesday, the largest foreign banks, with $50 billion
or more in U.S. assets, will need to set up an intermediate holding
company subject to the same capital, risk management and liquidity
standards as U.S. banks.
The Fed also gave foreign banks a year longer to meet the
requirement to set up the new structure, with the new deadline set
as July 1, 2016. Both changes had been widely expected in the
market.
Foreign banks with sizable operations on Wall Street such as
Deutsche Bank and Barclays <BARC.L> had pushed back hard against the
plan because it means they will need to transfer costly capital from
Europe.
(Reporting by Aashika Jain in Bangalore;
editing by Eric Walsh)
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