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Deutsche Bank dismisses criticism of restructuring plan

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Deutsche Bank dismisses criticism of restructuring plan

Deutsche Bank AG CFO James von Moltke has dismissed an opinion piece by certain executives of a U.S. think tank who criticized the German lender's restructuring plan, which they said involved the diversion of critical loss-absorbing capital buffer to appease angry shareholders.

In their piece in the American Banker, Better Markets President and CEO Dennis Kelleher and colleague Joseph Cisewski said it is "grossly irresponsible" to reduce capital to boost short-term returns for shareholders, adding that Deutsche's plan could jeopardize its financial resiliency and could pose risks to the global financial system. Should the plan fail or the economy weaken, U.S. taxpayers would be on the hook to prop up the bank, they said.

In response, von Moltke said the piece was a "gross misrepresentation" of Deutsche Bank's plans and that the Better Markets executives' interpretation was "groundless and could not be further from the truth," pointing out that the bank was using existing resources to address underlying strategic challenges at the expense of short-term returns.

"Our capital and liquidity ratios and the levels of risk that we are running are among the most prudent in the industry," von Moltke said.

Deutsche Bank's plan to reduce its common equity Tier 1 ratio target by 50 basis points to an expected minimum of 12.5% will keep the lender well above expected regulatory requirements and in line with global peers, von Moltke added.

Deutsche Bank mapped out in July details of its €7.4 billion restructuring plan, which includes the creation of a bad bank with €74 billion of risk-weighted assets, the separation of its transaction bank into a new business unit and 18,000 job cuts by 2022. The plan will make the bank safer and stronger and will be carried out without the need for external support, von Moltke said.