1116 GMT November 13, 2019
Deutsche Bank said in a statement that it would make Frankfurt rather than London the primary booking hub for its investment banking clients, as per an announcement made last year, according to Reuters.
“By definition this involves moving assets from London to Frankfurt, a process which is already underway with the full understanding of UK and EU regulators,” it said, declining to specify the volume of asset shifts.
A source familiar with the matter said that the European Central Bank, as Europe’s main financial supervisor, was putting pressure on banks to shift investment banking activities from London to the continent.
The ECB thereby wants to prevent investment banks setting up empty shells on the continent while still supplying their services from London, the person added.
Regulators are demanding that capital, risk management and governance structures are set up on the continent to support investment banking activities, the person said.
The ECB declined to comment.
According to a report by the Financial Times, Deutsche Bank could over time move about three quarters of its estimated €600 billion (£533.56 billion) in capital back from London to Frankfurt.
One option being considered is to shrink the London balance sheet so it ends up being smaller than its US holding company, which has roughly $145 billion of assets, the paper said.
According to a source close to the matter, Deutsche Bank is also considering transforming its UK arm into a smaller, less complex and ring-fenced subsidiary.