Europe's Deutsche Bank AG announced its plans to cut assets by EUR 250 billion (US$332 billion) earlier today, following the dramatic decline in its profits. Deutsche Bank is the third bank after Barclays Plc and UBS AG who are in the process of initiating compliance with the stricter capital rules.
Deutsche Bank Chief Financial Officer Stefan Krause said today that Deutsche Bank will downgrade leverage by revising the way it accounts for derivatives and reducing the company's EUR 70 billion portfolio of assets. He shared the plan after the bank announced that net income had dropped 49% to EUR 334 million, almost half of the EUR 767.6 million estimate predicted by nine analysts.
Anshu Kain, Co-Chief Executive Officer of Deutsche Bank, started removing riskier assets, reducing staff numbers and increasing capital by selling shares. The latter was brought about by the increase in demand for stronger finances by regulators and shareholders who doubted the ability of Europe's banks to cope with another financial crisis.
"Regulators, politicians and analysts have shifted their focus towards leverage ratios in the past few months," remarked the Deutsche Bank CFO. "We understand that market expectations and potential revisions to the current regulations may force us to reduce leverage further and we have all intentions to do so."
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