Deutsche Bank AG’s U.S. business was put on a Federal Reserve list of problem banks and added to a group of troubled lenders monitored by the country’s deposit insurance regulator, according to a person familiar with the matter, compounding the challenges for its new Chief Executive Officer Christian Sewing.
The Federal Deposit Insurance Corporation has added Deutsche Bank’s federally insured U.S. business to a list of banks with weaknesses serious enough to endanger their financial viability, the person said Thursday, confirming reports by the Financial Times and the Wall Street Journal. The Fed’s decision dates from a year ago, according to the Journal.
Deutsche Bank slumped 5.4 percent at 3:04 p.m. in Frankfurt trading, to a near-record low, extending losses this year to more than 41 percent.
“The ultimate parent of the Deutsche Bank Group, Deutsche Bank AG, is very well capitalized and has significant liquidity reserves,” the lender said in an emailed statement. “We have previously indicated that our regulators have identified various areas for improvement relating to our control environment and infrastructure. We are highly focused on addressing identified weaknesses in our U.S. operations."
The FDIC declined to comment. The Fed didn’t immediately respond to requests for comment.
Deutsche Bank is accelerating a plan to refocus on its relationship with clients in Europe, though Sewing has said that the U.S. will remain an important market for the lender. U.S. regulators in March warned Europe’s biggest investment bank it must act more urgently to fix lapses described in a series of settlements with the Federal Reserve over the past few years, Bloomberg reported earlier this month.
The bank has lost money in each of the last three years, but is predicting a return to profit this year.
This article was provided by Bloomberg News.