A top US banking regulator addressed Deutsche Bank's capital levels as "horrible". The banking regulator said that the bank is the worst on a list of global banks. This is based on one measurement of leverage ratios.
Vice Chairman Thomas Hoenig of the Federal Deposit Insurance Corp said that the bank is undercapitalized. This was stated in an interview. He also added that the bank has no margin of error.
The global capital rules known as the Basel III accord allows its lenders to appear well capitalized even when they are not. This is because the rules allow banks to use complex measurements of how uncertain their loans are to determine the capital they must hold.
Hoenig also added that using a stronger leverage ratio measurement that compares the shareholder equity to its total assets without using uncertain weightings. However he said that the picture for Deutsche Bank is entirely different.
This year, Deutsche Bank is almost finished raising Eur5 billion in new debts and equity. This boosted the core capital ratio to roughly 9.5% which the company says has made it among the best capitalized banks among rivals in the industry contrary to what Hoenig stated.
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