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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