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Deutsche Bank leverage in spotlight after Basel capital deal

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Deutsche Bank leverage in spotlight after Basel capital deal

Deutsche Bank AG would be at potential risk of capital distribution constraints if the recently finalized Basel III regulations were implemented today, data from S&P Global Market Intelligence suggests.

Under the regulations, global systemically important banks must have enough Tier 1 capital to meet a leverage ratio buffer of 50% of their risk-weighted higher-loss absorbency requirements, in addition to the standard minimum leverage ratio requirement of 3%. This means that Deutsche Bank and HSBC Holdings Plc, which currently have a 2% risk-weighted higher loss absorbency requirement, would each need to have a leverage ratio of at least 4.0%.

But while HSBC's leverage ratio is well above that requirement at 5.70%, as of Sept. 30, Deutsche Bank's ratio stood at 3.80% on the same date. The leverage ratio buffer requirement will apply from Jan. 1, 2022, and will be based on the 2020 list of G-SIBs.

The leverage ratio measures Tier 1 capital as a percentage of total leverage, including both on- and off-balance sheet exposures.

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