Deutsche Bank to shift assets from UK on ECB pressures

The German investment bank could eventually shift about three-quarters of its estimated EUR 600-billion balance sheet to its homeland.

The move will be a big blow to London on the back of owning almost half of the total assets held by European lenders in the UK, the Financial Times reported, citing sources as saying.

The European Central Bank (ECB) requested the Frankfurt-based lender to comply with rules for branches in a “third country”, which Britain will become after leaving the European bloc in March 2019. This will force DB to turn its London arm into a ring-fenced subsidiary.

In 2017, Deutsche Bank announced plans to make “Frankfurt rather than London the primary booking hub for our investment banking clients,” a spokesperson for the German bank said.

The terms on which banks will operate in the EU and UK after Brexit remains unclear, as both parties have failed to reach a firm political agreement yet.

However, DB intends to operate in the UK as a branch in line with the UK Prudential Regulation Authority guidance, sources said.

No final decision has been made on the size of the asset move yet, Deutsche Bank added, noting that the lender has already started shrinking its UK activities.