Deutsche Bank to move assets from London to Frankfurt after Brexit

[September 17, 2018]  FRANKFURT (Reuters) - Deutsche Bank <DBKGn.DE> said on Monday that it would move assets from London to Frankfurt after Britain's planned exit from the European Union next year, in line with demands from British and EU regulators.

Deutsche Bank said in a statement that it would make Frankfurt rather than London the primary booking hub for its investment banking clients, as per an announcement made last year.

"By definition this involves moving assets from London to Frankfurt, a process which is already underway with the full understanding of UK and EU regulators," it said, declining to specify the volume of asset shifts.

A source familiar with the matter said that the European Central Bank as Europe's main financial supervisor was putting pressure on banks to shift investment banking activities from London to the continent.

The ECB thereby wants to prevent investment banks setting up empty shells on the continent while still supplying their services from London, the person added.

Regulators are demanding that capital, risk management, governance structures are set up on the continent to support investment banking activities, the person said.

The ECB declined to comment.

According to a report by the Financial Times, Deutsche Bank could over time move about three quarters of its estimated 600 billion euros ($699.5 billion) in capital back from London to Frankfurt.

A man walks past Deutsche Bank offices in London, Britain, December 5, 2013. REUTERS/Luke MacGregor/File Photo

One option being considered is to shrink the London balance sheet so it ends up being smaller than its U.S. holding company, which has roughly $145 billion of assets, the paper said.

According to a source close to the matter, Deutsche Bank is also considering transforming its UK arm into a smaller, less complex and ringfenced subsidiary.

Deutsche Bank said that while the terms on which banks will operate in the EU and UK after Brexit remained unclear the lender plans to operate in the UK as a branch in line with the Prudential Regulation Authority's guidance.

($1 = 0.8578 euros)

(Reporting by Arno Schuetze and Andreas Framke; Editing by Maria Sheahan)

[© 2018 Thomson Reuters. All rights reserved.]

Copyright 2018 Reuters. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.  Thompson Reuters is solely responsible for this content.