Deutsche Bank, Germany’s biggest lender, estimated in 2010 that it might need to inject almost $20 billion into its U.S. unit to comply with the same rules as domestic banks, the Wall Street Journal reported last year, citing an internal company document. The division, known as Taunus Corp., dropped its status as a bank holding company in February.
Barclays, the U.K.’s second-biggest bank, said in February 2011 that it deregistered Barclays Group U.S. as a bank holding company, partly to sidestep the capital requirements.
UBS AG and Credit Suisse Group AG, Switzerland’s largest lenders, were among firms that didn’t have holding companies to start with. Most of the largest foreign institutions have small commercial-banking units in the U.S., where their operations are largely centered on securities trading.
Toronto-Dominion Bank already has a holding company in the U.S. that will have to add about $5 billion in capital to comply with Dodd-Frank, according to Brad Smith, an analyst at Stonecap Securities Inc. The requirement to consolidate all U.S. businesses into the holding structure would boost the capital need by billions of dollars, Smith said in a note today.
“This is not great news for any Canadian bank as it will likely push up the amount of capital required to run their U.S. businesses,” Smith said. “All Canadian banks that are running capital markets businesses in the U.S. will need to take a very close look at their business lines.”
Spokesmen for the Fed, Frankfurt-based Deutsche Bank, Barclays and UBS and Credit Suisse, both based in Zurich, declined to comment on the potential rule change.
Daniel Tarullo, a Fed governor who chairs the committee on bank supervision, is scheduled to speak about the regulation of foreign banking organizations today at Yale University in New Haven, Connecticut.