Deutsche Bank AG has been asked by the European Central Bank to simulate an orderly wind-down of its trading book, Chief Financial Officer James von Moltke told Bloomberg on Monday.
“There’s no novelty about the exercise per se; the novelty is that we’re doing this with the ECB,” von Moltke said. The exercise will take several months, being “broader in scope” than previous ones done for UK and US supervisors, he said.
Modeling the wind-down of viable businesses, which regulators in the US and UK have required for years, is different from the broader planning for closing an entire bank, which focusses on reacting to a bankruptcy.
“In general, an orderly wind-down of trading activities leads to a release of capital and liquidity that support these books over time,” von Moltke said. Deutsche Bank is the first to receive such a request from the ECB, according to a person familiar with the matter.
The ECB hasn’t publicly begun any comparable, system-wide exercise for the banks under its supervision. A spokesperson declined to say whether Deutsche Bank was the first bank to receive such a request, noting that “the ECB does not comment on individual banks.”