Deutsche Bank will reduce its balance sheet as regulators implement stricter rules on the relation of equity to total assets, Chief Financial Officer Stefan Krause said.
'We have to further reduce our balance sheet' and set aside profit, he said in the interview with the German newspaper. Klaus Winker, a spokesman for Frankfurt-based company, confirmed the comments when contacted by Bloomberg News by phone.
Regulators are increasingly looking at leverage, in addition to measures based on risk weightings assigned to different assets, to gauge banks’ financial strength. The rules, which are at various stages of development in different countries, risk hurting investors as lenders will have to reduce assets or raise capital to comply.
Deutsche Bank wants to take 'substantial steps' in the next year or two on selling assets from a $115.4bn portfolio that isn’t central to its business, Krause said. The company will have to reduce liquidity, which counts toward assets, and could pursue other measures, the CFO said.
Reuters reports that Krause also said that Deutsche Bank will not need to transfer capital holdings to its U.S. subsidiary to meet the U.S.'s stricter regulatory requirements.
'Because of the Americans' definition of capital, we can use supplementary capital to fulfil these requirements', CFO Krause was quoted as saying. 'For that reason, a transfer of capital from Germany will not be necessary here'.