BoE stress tests: all you need to know

The Bank of England has released the results of its latest round of its annual banking stress tests and its semi-annual financial stability report this morning. Used to measure the resilience of a bank’s balance sheet in adverse scenarios, the stress tests measured the impact of a severe slowdown in Chinese growth, a global recession […]

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Draghi: Eurozone will decline without vital productivity growth

It’s productivity, stupid. European Central Bank president Mario Draghi has become the latest major policymaker to warn of the long-term economic damage posed by chronically low productivity growth, as he urged eurozone governments to take action to lift growth and stoke innovation. Speaking in Madrid on Wednesday, Mr Draghi noted that productivity rises in the […]

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Asia markets tentative ahead of Opec meeting

Wednesday 2.30am GMT Overview Markets across Asia were treading cautiously on Wednesday, following mild overnight gains for Wall Street, a weakening of the US dollar and as investors turned their attention to a meeting between Opec members later today. What to watch Oil prices are in focus ahead of Wednesday’s Opec meeting in Vienna. The […]

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Banks, Financial

RBS emerges as biggest failure in tough UK bank stress tests

Royal Bank of Scotland has emerged as the biggest failure in the UK’s annual stress tests, forcing the state-controlled lender to present regulators with a new plan to bolster its capital position by at least £2bn. Barclays and Standard Chartered also failed to meet some of their minimum hurdles in the toughest stress scenario ever […]

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Barclays: life in the old dog yet

Barclays, a former basket case of British banking, is beginning to look inspiringly mediocre. The bank has failed Bank of England stress tests less resoundingly than Royal Bank of Scotland. Investors believe its assets are worth only 10 per cent less than their book value, judging from the share price. Although Barclays’s legal team have […]

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Categorized | Banks, Insurance

Deutsche raises €1bn in Abbey Life sale

Posted on September 28, 2016

File photo of workers walking past the London headquarters of Deutsche Bank in the City of London...Workers walk past the London headquarters of Deutsche Bank in the City of London, Britain in this May 19, 2015 file photo. Deutsche Bank posted a 20 percent rise in revenue at its lucrative bond trading business in the third quarter, helping to take the sting out of its previously announced record 6 billion-euro ($6.6 billion) group pre-tax loss. REUTERS/Toby Melville/Files©Reuters

Deutsche Bank has reached an agreement to sell its Abbey Life insurance business to Phoenix Group for €1.09bn, in a move that will give a small boost to the German bank’s capital position.

The deal helped spur a rise in Deutsche’s shares Wednesday after hitting their lowest levels in more than two decades this week. The shares gained 3.2 per cent in early trading to €10.90.

    The financial position of Germany’s biggest bank has been under scrutiny in recent weeks, after it emerged that the US Department of Justice had made an initial request of $14bn from Deutsche to settle allegations of mis-selling mortgage-backed securities.

    Deutsche has said that it has no intention of paying anywhere near this sum, but the prospect of a big fine has sparked speculation about whether the bank could be forced into a capital raising, or even need a state bailout. Deutsche insisted on Monday that neither was on the agenda.

    Deutsche said on Wednesday that the sale of Abbey Life would generate an €800m pre-tax loss, due to the impairment of goodwill and intangible assets.

    However, it said that the sale would have improved its core tier one capital ratio — a measure of financial strength — by 10 basis points. Deutsche’s ratio stood at 10.8 per cent at the end of June, comfortably above the minimum required by regulators but well below many of its peers.

    The bank also said that the loss on the sale was “not expected to have a material impact” on Deutsche’s so-called available distributable items, which determine the payment of coupons on some of its hybrid capital.

    John Cryan, Deutsche’s chief executive, said that he was “pleased” to have reached an agreement to sell Abbey to a specialist life fund provider.

    He added that Deutsche’s asset management arm would “continue to focus on its core businesses of active, passive and alternatives”. “We continue to build a simpler and better Deutsche Bank,” he said.