Deutsche Bank may face higher capital bar for leveraged loans



(Reuters) – The European Central Bank told Deutsche Bank AG that it will likely need more capital to account for risk when lending to heavily indebted clients, Bloomberg News reported Tuesday, citing people familiar with the matter.

The report says the German lender could avoid a higher capital requirement if it can effectively reduce its exposure before the ECB sets targets for 2022 by the end of the year.

“We have extensive experience in business (leveraged loans) and take a prudent approach to managing risk in accordance with regulatory requirements,” said Deutsche Bank.

“We don’t comment on the dialogue with our regulators in principle.”

The ECB declined to respond to Reuters’ request for comment.

The ECB’s move could complicate matters for CEO Christian Sewing, who embarked on a sweeping restructuring two years ago to bring the bank back to profitability.

The bank’s first-quarter net income was the highest in seven years thanks to its investment banking activities, which outpaced major US competitors.

(Reporting by Sohini Podder in Bangalore; editing by Krishna Chandra Eluri)


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