Deutsche Bank’s US arm fails stress test
DEUTSCHE Bank’s US division has failed its first public Federal Reserve stress test, while a raft of others, including Goldman Sachs and Morgan Stanley, have had to revise their payout plans.
Deutsche Bank’s US holding company had already been put on the Fed’s list of troubled lenders but the central bank said it had now failed the stress test on qualitative grounds, citing concerns over the company’s ability to “effectively determine its capital needs on a forward-looking basis”.
Deutsche Bank’s US holding company had taken part in previous stress tests, but this was the first time its results have been made public.
Its failure will mean it will have to get dividend payments it wants to pay back to its Frankfurt parent company signed off by the Fed.
Deutsche Bank last night reiterated the business was just one part of the US operation, and said the other entities had had “nine years to adjust to regulatory requirements as Federal Reserve stress tests have evolved”.
While Deutsche Bank was alone in failing the stress test, Goldman Sachs and Morgan Stanley received a warning to keep shareholder payouts at last year’s levels.
The pair were handed conditional non-objections to their plans, as the Trump administration’s tax cut had partly been behind their capital ratios falling. The two banks were among six which had to revise payout plans.