FRANKFURT (Reuters) – Deutsche Bank (DBKGn.DE) is planning to hold a larger portion of its 270 billion euros in liquidity buffers in securities rather than cash as it seeks to increase its profitability, its Chief Financial Officer said.
FILE PHOTO: People are silhouetted next to the Deutsche Bank’s logo prior to the bank’s annual meeting in Frankfurt, Germany, May 24, 2018. REUTERS/Kai Pfaffenbach
“Of (our liquidity reserves) about 200 billion euros is in cash. So it doesn’t take very much in terms of incremental risk tolerance to move the needle pretty significantly,” James von Moltke said on an analyst call discussing third-quarter earnings.
“We think we can generate 50 to 100 basis points of additional yield without taking really a significant risk or certainly well within our risk appetite,” he added.
Parking cash at the German central bank costs Deutsche Bank 0.4 percent in interest, while investments in some safe-haven government bonds promise at least small returns.
Since its 2016 crisis, Deutsche Bank has been managing its liquidity more conservatively than peers and ratings agencies would be comfortable with Deutsche’s new approach, von Moltke said.
Reporting by Arno Schuetze; Editing by Tom Sims