Deutsche Bank bows to ECB pressure around assets and UK business post Brexit
(17 September 2018 – UK) Following increasing pressure from European regulators Deutsche Bank has scaled up plans to shift hundreds of billions of assets from London to Frankfurt after Brexit.
The European Central Bank has insisted that Deutsche bulk up its capital and liquidity in Germany to comply with rules for branches in a ‘third country’, which the UK will become when it leaves the EU in March.
Demands from the ECB are increasing the likelihood that Deutsche will transform its UK arm into a ringfenced subsidiary after Brexit. While the impact on headcount in London should initially be modest, there are more serious long-term implications of the movement of capital from the City, such as the ECB gaining more regulatory control of banks.
While no final decision has been made on the size of the asset move, the Bank has already started shrinking its UK activities with more than a quarter of UK assets earmarked for transfer, mainly related to servicing its EU clients.
ECB supervisors have told Deutsche that a UK branch should be limited to serving corporates and retail customers in the host country, rather than exporting investment banking services across the globe.