The FINANCIAL — Deutsche Bank has been informed by the European Central Bank (ECB) of its decision regarding prudential minimum capital requirements for 2017, following the results of the 2016 Supervisory Review and Evaluation Process (SREP).
The decision requires Deutsche Bank to maintain a phase-in Common Equity Tier 1 (CET 1) ratio of at least 9.51% on a consolidated basis, starting January 2017. This CET 1 capital requirement includes: the minimum Pillar 1 requirement (4.50%); the Pillar 2 requirement (2.75%); the capital conservation buffer (1.25%); the countercyclical buffer (currently 0.01%); and the requirement deriving from Deutsche Bank’s designation as global systemically important bank (1.00%).
The new CET 1 capital ratio requirement of 9.51% for 2017 is below Deutsche Bank’s current SREP requirement of 10.76% (for 2016). It sets the level below which Deutsche Bank would be required to calculate the Maximum Distributable Amount (MDA). The MDA is used to determine restrictions on distributions in the form of dividends on CET1 capital, new variable remuneration and coupon payments to holders of Additional Tier 1 instruments, according to Deutsche Bank.
Corresponding 2017 requirements are set for Deutsche Bank’s Tier 1 capital ratio (11.01%) and Total capital ratio (13.01%). All requirements are articulated on a phase-in basis. In comparison, Deutsche Bank’s last reported consolidated capital ratios on a phase-in basis were 12.58% CET 1 capital, 14.47% Tier 1 capital and 16.15% Total capital, all as of 30 September 2016.