Stefan Krause, Deutsche's chief financial officer, told the Financial Times that the lender was confident it would be able to meet the new capital and leverage requirements imposed on its U.S. arm. He said the balance sheet adjustment should not be seen as a pullback from the bank's U.S. franchise, where the lender is focused on growing its asset and wealth management business as well as battling to regain ground lost to U.S. rivals in its flagship fixed income arm.
"The U.S. continues to be an important market for us. We are very comfortable we will be able to meet the leverage requirements in the U.S.," he said.
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Deutsche Bank will aim to reduce its $400 billion balance sheet in the U.S. – not including the $200bn held in its U.S. branch that does not fall under the new rules – to about $300 billion in part by reassigning operations such as its Mexican arm and its Frankfurt and Tokyo-based repo businesses that are currently part of its U.S. business elsewhere.
The bank will also reduce a sizeable chunk of its repo business in the U.S. after discovering that some of its clients were not making use of its other offerings. The capital-intensive but low margin short-term lending is often offered by banks to hedge fund clients as a sweetener for other more lucrative business.