Another Deutsche Bank bailout clue


Federal Reserve Drops Toughening Liquidity Rules on Foreign Banks

By Kiran Stacey and Laura Noonan
Financial Times, London
Friday, October 11, 2019

U.S. banking regulators have dropped an idea to subject local branches of foreign banks to tough new liquidity rules, in a move that could benefit the troubled Deutsche Bank more than any other.

The Federal Reserve will announce today that it has decided against forcing U.S. branches of foreign banks to hold a minimum level of liquid assets to protect them from a cash crunch, according to people familiar with the decision.

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They added that such rules are likely to be proposed in the coming months by international regulators instead, an outcome the banks themselves have argued is preferable to national regulators imposing rules.

Foreign banks do most of their U.S. business through intermediate holding companies, or IHCs, which are subject to extensive regulation and stress testing. Germany’s Deutsche Bank, which is scaling back its Wall Street business as it tries to stem spiralling losses, potentially has the most to gain from the concessions since it has the biggest branching presence of any foreign lender, with assets of $175 billion in its main U.S. branch. ...

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