A TOP US banking regulator called Deutsche Bank’s capital levels “horrible” this weekend and said it is the worst on a list of global banks using one measure of leverage ratios.
“It’s horrible, I mean they’re horribly undercapitalised,” Federal Deposit Insurance Corp vice chair Thomas Hoenig said. “They have no margin of error.”
Hoenig, who is second-in-command at the regulator, said global capital rules, known as the Basel III accord, allow lenders to appear well-capitalised when they are not.
Deutsche Bank is almost done raising €5bn (£4.2bn) in new debt and equity, boosting its core capital ratio to around 9.5 per cent, which it says has made it one of the best-capitalised banks among its peers.
“To say that we are undercapitalised is inaccurate,” Deutsche Bank’s chief financial officer Stefan Krause said, in response to Hoenig’s comments.
“To suggest that leverage puts us in a position to be a risk to the system is incorrect,” Krause said, calling Hoenig’s metric “misleading” when used on its own.
City A.M. Reporter