The Financial Times recently revealed that Deutsche Bank enjoyed an exception to the rules of the 2016 European Banking Authority (EBA) stress test published in July. According to the Financial Times, the inclusion of a $4bn sale of Hua Xia bank boosted Deutsche Bank’s core equity tier 1 (CET-1) ratio under the adverse scenario from 7.4 to 7.8 percent. Although the sale was agreed on 28 December 2015, it has still not been completed. While Deutsche Bank enjoyed a special treatment, pursuant to the Financial Times Spain’s Caixabank was not allowed to include the impact of the sale of €2.65bn in foreign assets to its parent company Criteria Holding in its results although this sale was completed already in March 2016.
In order to restore faith in Europe’s banking sector and credibility in the European Banking Authority, we wrote a letter to EBA asking for clarification. Our letter on the special treatment for Deutsche Bank follows up on the discrepancies of Deutsche Bank’s leverage ratio recently reported by EBA and the US-based Federal Deposit Insurance Corporation (FDIC).
Please find our correspondence with EBA here: