Eased Regulations Provide Advantage to US Banks, Says Deutsche Bank CFO

Deutsche Bank’s Concerns Over U.S. Deregulation

Deutsche Bank has raised alarms about potential rollbacks of U.S. financial regulations, suggesting that such changes could give German banks an edge over international rivals.

James von Moltke, the bank’s CFO, expressed during an investor meeting hosted by Bank of America that adjustments to the leverage ratio rules might enable banks to “support more capabilities,” possibly benefiting market clients. He mentioned that the capital allocation by banks and private lenders in bond and currency financing could lead to “likely contracted margins.”

The new administration under Trump is expected to relax regulations, enhancing banks’ ability to provide credit and increase shareholder returns. This shift raises fears in Europe that banks within the bloc might struggle to compete with major global players in areas like bond and currency trading.

“The changes will bring additional benefits to U.S. banks,” von Moltke remarked during a recent session in London. He noted that Deutsche Bank’s decisions are made based on integrated capital levels, implying that despite deregulation in the U.S., their strategy remains unchanged.

Deutsche Bank believes it can still gain market share in the U.S., with the CFO highlighting recent investments in rate businesses and credit trading. Earlier in the year, the bank also boosted its bond sector by allocating more resources to its funding operations.

Reflecting on the reforms that followed the 2008 financial crisis, von Moltke noted the importance of assessing whether the balance between financial stability and economic growth remains valid.

“There’s this push towards deregulation from the U.S.,” he commented. “While discussions about the extent and nature of changes are ongoing, it’s clear they could eventually create a competitive disadvantage for European banks.”

In response, European officials have called for simpler banking regulations, but their efforts might be hindered by the structure of European institutions. Von Moltke noted that these efforts could be “stuck.”