Deutsche Bank to slash balance sheet by 20%

22 July 2013

Deutsche Bank is expected to announce plans to reduce its balance sheet by up to a fifth in order to comply with incoming stricter rules for financial stability.

Germany's biggest lender is expected to announce the move during its second quarter results, the Financial Times reports.

The bank is aiming to slash its balance sheet by 20 per cent to €1 trillion ($1.3 trillion) by the end of 2015 in anticipation of tougher rules that are largely expected to require banks to use more equity capital to fund their business. This will mean the taxpayer will be less at risk should something go wrong within an institution.

It is looking to achieve a minimum three per cent ratio of overall equity to loans by the end of 2015.

Banks claim equity is the most expensive way to fund their businesses, although it is the safest form for taxpayers as shareholders are the first to lose their money in cases of bankruptcy.

By Tony Aynsley

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