ECB asks Deutsche Bank to simulate costs of winding down trading - CFO
* Task is analytical and hypothetical, Deutsche's CFO says
* The largest capital markets bank under ECB supervision
* Unrelated to "Project Colombo" review of investment arm
* Review for ECB to be completed later this year
(Adds details from interview, background)
FRANKFURT, April 16 (Reuters) - The European Central Bank
has asked Deutsche Bank to estimate the costs of
winding down the trading operations of its investment bank, the
first such simulation by one of Europe's biggest banks,
Deutsche's finance chief said on Monday.
But Chief Financial Officer James von Moltke said the ECB's
request was not an unusual exercise and that it was totally
unrelated to Deutsche's internal review of its global investment
"We think we are first in the queue here because we are the
largest capital markets bank in the ECB's supervision," von
Moltke said in an interview with Reuters.
The timing of the simulation is sensitive because Deutsche
Bank's investment banking division has been losing market share
and key staff, contributing to three consecutive years of losses
at Germany's largest lender.
Last week, Deutsche ousted its chief executive John Cryan
and Marcus Schenck, one of the heads of the investment bank,
also left. The management upheaval has added to speculation that
Deutsche Bank might slim down its sprawling investment banking
An ECB spokeswoman declined to comment on individual banks.
"There are in general various exercises such as recovery plans
which the supervisor asks banks to provide," she said. "In any
case, the ECB does not intervene in any business model decision
Deutsche Bank, by talking publicly about normally private
supervisory exercises, wants to avoid the impression that
regulators are worried about the investment bank.
The bank has stabilised since late 2016, when speculation
mounted that it would need a government bailout in the wake of
huge fines from U.S. authorities.
Global regulators are working on unified procedures for such
exercises like the one that Deutsche is conducting. Regulators
are primarily focused on big global banks that trade risky
securities like derivatives.
The regulators have categorised some banks as "sytemically
important" because of their size. They have identified Deutsche
Bank as the most systemically important bank in the euro zone.
Regulators in Britain have already conducted a similar
simulation with Deutsche's London-based arm.
The exercise can shed light on whether a sudden halt of
trading activities would require government guarantees or
support from taxpayers, the Sueddeutsche Zeitung said in its
Monday edition. The German paper was the first to report the
news of the simulation.
"This (the exercise) doesn't have any connection to any sort
of state aid," von Moltke said.
Deutsche Bank began the task in late January and expects to
conclude it in the third quarter.
(Reporting by Tom Sims and Andreas Framke
Additional reporting by Frank Siebelt
Editing by Arno Schuetze and Jane Merriman)
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