WM Market Reports

IMF Says Deutsche Bank Poses Greatest Systemic Risk

Amisha Mehta, Deputy Editor, 1 July 2016

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The International Monetary Fund has flagged Germany's largest lender as a potential source of shock to the financial system given its global ties.

Of all the globally systemically important banks, Deutsche Bank is potentially the riskiest, the International Monetary Fund said yesterday.

The IMF said in its Financial Sector Assessment Program: “Among the G-SIBs (globally systemically important banks), Deutsche Bank appears to be the most important net contributor to systemic risks, followed by HSBC and Credit Suisse. 

“The relative importance of Deutsche Bank underscores the importance of risk management, intense supervision of G-SIBs and the close monitoring of their cross-border exposures, as well as rapidly completing capacity to implement the new resolution regime,” it added.

The IMF highlighted the key role that Germany’s financial sector plays in the global economy. It noted the country, home to Deutsche Bank, Allianz and Commerzbank, has the third largest asset management industry in the European Union, while its sovereign bond market is a safe haven and benchmark for fixed income instruments globally.

The report came shortly after the US Federal Reserve revealed Deutsche Bank Trust Corporation, which consists of Deutsche's US transaction bank and wealth management business, and Banco Santander's US bank subsidiary once again failed the Fed's annual “stress test”. 

In afternoon London trading, Deutsche Bank shares were down 3.55 per cent. 

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