July 22, 2013

How will markets react when informed that Deutsche Bank is leveraged 33 to 1?

Sir, Daniel Schäfer, on July 22, reports that Deutsche Bank is to cut assets for stricter capital rule aiming for a 3 percent loan to equity ratio. And “stricter” is there sort of laughable.

On January 2015, according to the Basel Committee, banks will have to report their straight leverage ratio. Can you imagine how Deutsch bank creditors, made aware they should not expect to be bailed out, will react when they read that Deutsch Bank is leveraged 33 to 1?

If 33 to 1 leverage is stricter, how flexible is it now?