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Deutsche Bank Needs Up To EUR3 Bln For Updated EBA Test

By Alexandra Edinger and Eyk Henning

Of Dow Jones Newswires

FRANKFURT (Dow Jones)--

Germany's Deutsche Bank AG (DB) faces a capital shortfall of up to EUR3 billion in a new stress test currently being carried out by the European Banking Authority, a person familiar with the matter told Dow Jones Newswires on Thursday.

Germany's largest bank is expected to meet the EBA's capital requirements without the need for a capital hike, through reducing risk weighted assets and retaining earnings, the person added.

Deutsche Bank Chief Financial Officer Stefan Krause said in a presentation at the end of October that the bank will, among other measures, need to retain earnings of EUR2.8 billion to achieve a core Tier one capital ratio of over 9%.

The EBA requires banks to achieve a core Tier one capital ratio of 9% by the end of June next year under Basel 2.5 rules, even under a tougher stress test scenario in which they have to mark southern European sovereign bonds to market value. Deutsche Bank was found to have a capital shortfall of EUR1.2 billion in an earlier stress test in early October, but the EBA's latest test is expected to reveal a much higher need.

The EBA will likely present its findings later next week or the week after, another person familiar with the matter said.

-By Alexandra Edinger and Eyk Henning, Dow Jones Newswires; 4906929725112; alexandra.edinger@dowjones.com