ECB sets Deutsche Bank CET 1 capital ratio requirement of 9.51%

The European Central Bank (ECB) has lowered Tuesday the minimum capital requirements for Deutsche Bank AG, giving the lender more leeway to structure bonus payments and dividends.

Deutsche Bank said the ECB requires it to maintain a phase-in common equity tier 1 (CET 1) ratio of at least 9.51 percent on a consolidated basis, starting January 2017.

This is below Deutsche Bank’s current requirement of 10.76 percent, a threshold the bank cannot fall below this year without having to limit dividends, variable remuneration and coupon payments to holders of Additional Tier 1 instruments, the bank said.

The drop in requirements for 2017 comes after a change in the rules. The ECB now expresses parts of its capital demands as voluntary guidance.

The ECB demanded that, on average, banks hold Core Equity Tier 1 capital, a key measure of their own funds, equal to 8.3 percent of their risky assets if they are to pay out to staff and investors. Once capital guidance is factored in, the ECB’s demands were stable year on year at 10.1 percent.

Source: Reuters