Deutsche riskiest bank in the world, says US insurer
Bank has lower capital ratio than US banks before the 2008 crisis.
By Business Insider | Updated:
By Ben Moshinsky
Deutsche Bank is the riski est bank in the world, ac cording to the US Federal Deposit Insurance Corpo ration (FDIC). The bank has a leverage ratio of 2.68% according to the regulator's calculations.
The leverage ratio is a measure of a bank's financial sustainability, and shows how much equity capital a lender has against assets such as lo ans. US calculation includes the amount of derivatives banks have on their books. A higher percentage suggests a bank is in a better position to weather losses and defaults. On an average, important banks had a leverage ratio of 5.6% -or more than double that of Deutsche Bank. Wells Fargo is the strongest, with a ratio of 8.01%.
Banks are getting riskier, according to FDIC vice-chairman Thomas M Hoenig. “Although equity capital increased for US G-SIBs in the first half of the year, assets increased more than proportionately, including a significant expansion of their derivatives book,“ Hoenig said.
“The net effect was an increase in their leverage position. As markets recovered and as central banks around the world continue quantitative easing programs, incentives for increasing financial leverage intensified.“Deutsche Bank has a lower capital ratio than the US banks before the 2008 financial crisis.
Deutsche Bank is the riski est bank in the world, ac cording to the US Federal Deposit Insurance Corpo ration (FDIC). The bank has a leverage ratio of 2.68% according to the regulator's calculations.
The leverage ratio is a measure of a bank's financial sustainability, and shows how much equity capital a lender has against assets such as lo ans. US calculation includes the amount of derivatives banks have on their books. A higher percentage suggests a bank is in a better position to weather losses and defaults. On an average, important banks had a leverage ratio of 5.6% -or more than double that of Deutsche Bank. Wells Fargo is the strongest, with a ratio of 8.01%.
Banks are getting riskier, according to FDIC vice-chairman Thomas M Hoenig. “Although equity capital increased for US G-SIBs in the first half of the year, assets increased more than proportionately, including a significant expansion of their derivatives book,“ Hoenig said.
“The net effect was an increase in their leverage position. As markets recovered and as central banks around the world continue quantitative easing programs, incentives for increasing financial leverage intensified.“Deutsche Bank has a lower capital ratio than the US banks before the 2008 financial crisis.
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