ECB asks Deutsche Bank to calculate exit cost of its investment banking business

The move is aimed at gauging the risks of Deutsche Bank’s abrupt exit from its investment banking business.

As per a source, Germany’s biggest lender, Deutsche Bank has been asked by the European Central Bank to calculate the potential costs of significantly reducing the profile of its investment banking operations.

For some time now Deutsche Bank has been calculating the financial implications of closing its investment banking business.

The move is not related to changes at Deutsche Bank’s top management with Christian Sewing, a retail banking expert, being appointed to replace existing CEO John Cryan.

As per a source who spoke on the condition of anonymity since the matter is confidential, the entire point of this exercise is to gauge how Deutsche Bank’s derivatives and capital market business would be impacted if it were to abruptly exit from investment banking.

Deutsche Bank stated it “routinely” calculates the consequences of an orderly winding-down of positions in trading books for regulators.

The ECB declined comment.

Germany’s daily Sueddeutsche Zeitung had first reported that the bank was exploring this route and reported that other lenders are will also face similar requests at a later stage.

Incidentally, Deutsche Bank is in the middle of a review of its investment banking, known internally as Project Colombo.


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