Deutsche Bank Says Regulation Rollback Gives US Lenders an Advantage

Deutsche Bank Chief Financial Officer James von Moltke reportedly warned that America’s regulatory rollback is giving banks in the United States an edge.

Changes to the rules that cover the leverage ratio could give U.S. banks “more capacity, perhaps, to support their markets clients,” von Moltke told an investor conference organized by Bank of America, according to a Thursday (Sept. 18) Bloomberg report.

Capital deployment by banks and private credit companies in fixed income and currencies financing will likely persist, “so margins are likely to contract there,” von Moltke said, per the report.

The President Donald Trump administration has helped fuel efforts by banks to loosen regulations, leading to concerns in Europe that its banks will struggle to compete, the report said.

“The changes will give a further advantage to the U.S. banks,” von Moltke said, per the report. “It doesn’t really change our operations in the U.S. that there’s deregulation there,” as Deutsche Bank makes decisions according to its consolidated levels of capital.

Although the reforms prompted by the 2008 financial crisis made banks safer, “there’s a point in time at which you have to judge whether the trade-off of financial stability versus growth is … still the right one,” von Moltke said, according to the report.

“Then you have this impetus for deregulation that’s coming from the U.S.,” he said, per the report. “You can debate how much and which changes, but that it’ll present a competitive disadvantage to the European banks over time is indubitable.”

Meanwhile, Dr. Bill Roberts, fellow at the Cambridge University Judge Business School and former head of open banking at the U.K.’s Competition and Markets Authority, discussed banking regulation this week with PYMNTS’ Competition Policy International spoke earlier this week with (CMA).

On the topic of open banking regulation, Roberts said the United Kingdom’s top-down approach is appropriate for its market structure, but cautioned that other countries need to tailor their methods.

“If the point of you introducing open banking is to fix competition problems,” regulators would be better off using legal powers than relying on market forces, he said. “There’s no one right single answer to this. It all depends on what the circumstances are in the jurisdiction that you are regulating.”