Legal & Regulatory

Deutsche Bank Relives Amidst Regulatory Pressure

October 29
6:00 AM 2016

Deutsche Bank has provided some balm on concern about its stability as a settlement with United States authorities loom.

The bank said that it had returned to a profit in the third quarter and was making progress in its effort to turn around the business. Analysts had expected a loss for the quarter. In addition to this, Deutsche Bank, which is also has a big trading in New York and London, had said that its capital position had improved with its Tier 1 capital ratio edging up to 11.1 percent from 10.8 percent.

The quarterly results at Deutsche Bank were buoyed in part by improved trading revenue But its gain is not as strong as many of its rival. Deutsche Bank has also been steamlining in the last year, cutting jobs, stripping away business and simplifying its structure.

Up until now, the biggest challenge of the bank continues to be building confidence among investors, customers and clients. There is also a question remaining if the bank can pay a large penalty in the United States over the banks role in the mortgage securities debacle in the years before the financial crisis. Justice department had laid out a $14 billon penalty as its opening position in negotiation.

John Cryan, Deutsche Bank Chief Executive said that concerns about the settlement negotiations has shown a positive development.  In a conference call with analysts, he said "This has created uncertainty. Uncertainty that affects the market's view of Deutsche Bank as a counterparty."
Banks Chief Financial Officer, Marcus Schenck, said during the worst moments of the bank in late September,

Deutsche's cash cushion suffered.

Low interest have weighed on Deutsche Bank's retail banking performance in the last year and uncertainty in financial market is hurting trading and advisory activity.
The regulators are also looking into raising capital requirements, meaning that lenders must store more of their money to provide a cushion against adverse development instead of putting it into work.

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