ECB asks Deutsche Bank to gauge investment banking exit costs: source

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The headquarters of Germany's Deutsche Bank is photographed early evening in Frankfurt, Germany, January 26, 2016. REUTERS/Kai Pfaffenbach/File Photo

FRANKFURT (Reuters) – Deutsche Bank (DBKGn.DE) has been asked by European Central Bank supervisors to calculate the potential costs of winding down its investment banking operations, a source told Reuters on Sunday.

Germany’s biggest lender has been calculating the financial effects of a potential move to quit investment banking for some time, and the move is not related to the switch in Deutsche Bank’s top management position last Sunday when retail banking expert Christian Sewing was appointed to replace chief executive John Cryan.

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The point of the exercise is to estimate how the value of Deutsche Bank’s capital market and derivatives business would develop if the bank was to exit abruptly from new business, the source said on condition he not be named because the matter is confidential.

Deutsche Bank said it “routinely” calculates the consequences of an orderly winding-down of positions in trading books for regulators. The ECB declined comment.

Germany’s daily newspaper Sueddeutsche Zeitung was first to report on Deutsche Bank’s explorations induced by the ECB, saying other lenders are to face similar requests at a later stage.

Deutsche Bank is already in the middle of a global review of the investment bank, known internally as Project Colombo, to determine the way forward as revenues shrink and clients and staff leave.

Reporting by Hans Seidenstuecker, additional reporting by Frank Siebelt. Writing by Andreas Cremer, editing by Kathrin Jones and David Evans

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Godwin Okafor is a Financial Journalist, Internet Social Entrepreneur and Founder of Naija247news Media Limited. He has over 16 years experience in financial journalism. His experience cuts across traditional and digital media. He started his journalism career at Business Day, Nigeria and founded Naija247news Media in 2010. Godwin holds a Bachelors degree in Industrial Relations and Personnel Management from the Lagos State University, Ojo, Lagos. He is an alumni of Lagos Business School and a Fellow of the University of Pennsylvania (Wharton Seminar for Business Journalists). Over the years, he has won a number of journalism awards. Godwin is the chairman of Emmerich Resources Limited, the publisher of Naija247news.

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