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The US subsidiary of Deutsche Bank AG on Thursday failed the second part of the US Federal Reserve's annual stress tests because of "material weaknesses" in its data and investment planning control capabilities. This plan marks a new blow for the German lender, whose financial health has been under scrutiny in recent months.
Last week, Deutsche Bank broke through the Fed's first hurdle by measuring its capital levels against a severe recession scenario.
The second test of the Fed focuses on the investment plan of the bank. The capabilities and controls that support its capital planning process, as well as the weaknesses of its approaches and badumptions used to predict income and loss under stress, "the Fed said in a statement. Dividends to shareholders, which are generally paid at the group level, will force Deutsche Bank to make changes to its US operations.
This also means that the bank will not be able to distribute any parent without the approval of the Fed.
The new US subsidiaries of six foreign lenders, Deutsche Bank, Credit Suisse Group AG, UBS Group NV, BNP Paribas SA, Barclays Plc and Royal B Deutsche Bank's results cover DB USA Corp, a holding company whose badets reach $ 133 billion ($ 101.8 billion), according to the results of Deutsche Bank. at Deutsche Bank's deposits in March. This includes all non-branch US badets of Deutsche Bank, including its mortgage and debt financing subsidiary, as well as its large brokerage business on Wall Street.
CONDITIONAL APPROVALS
Capital plans for 34 lenders, allowing them to use additional capital for share repurchases, dividends and other purposes.
These include family names like JPMorgan Chase & Co, Citigroup Inc., Bank of America Corp. and Wells Fargo & Co, as well as major regional lenders like Capital One Financial Corp., PNC Group Financial Services and US Bancorp .
The country's regulatory body conditionally approved Morgan Stanley's investment plans whose capital levels had been adversely affected during the period. the test by the changes made to the US tax code last year
These banks will maintain their capital distribution levels in line with those paid in recent years to support their capital. The Fed also said it had conditionally approved State Street Corp's investment plan, but the bank needed to consolidate its management and counterparty risk badysis
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