Deutsche Bank US operations ‘troubled,’ Fed says

U.S. regulators are becoming increasingly concerned about Deutsche Bank’s condition.

The Federal Reserve listed the German bank’s U.S. operations as in “troubled condition,” The Wall Street Journal reported on Thursday, citing sources familiar with the matter. The designation, which was made last year and is one of the lowest possible, had not previously been made public and sent shares of the German bank tumbling on Thursday.

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TickerSecurityLastChangeChange %
DBDEUTSCHE BANK AG7.53+0.27+3.72%

When contacted by FOX Business, the Fed declined to comment.

The system for rating banks’ overall condition is called “CAMELS” and stands for capital adequacy, asset quality, management, earnings, liquidity and sensitivity. The scale is 1 through 5, with a rating of one considered the highest rating and 4 and 5 considered troubled.

But the Fed isn’t the only one reportedly eyeing the German banking giant.

The Journal also reported that the Federal Deposit Insurance Corporation (FDIC) put Deutsche Bank on its list of “problem banks.” Banks are added to this list of at-risk financial institutions if they receive a 4 or 5 rating from their main regulator.

A spokesperson for the FDIC told FOX Business that it does not comment on open and operating institutions.

Deutsche Bank has run into challenges throughout recent years. It has reported three consecutive full-year losses. The bank’s U.S. operations also failed the Federal Reserve’s stress tests multiple times throughout the past few years, and its new CEO recently announced it would be cutting thousands of jobs and scaling back its U.S. operations.

A spokesperson from Deutsche Bank said it does not comment on specific regulatory feedback, but Deutsche Bank “is very well capitalized and has significant liquidity reserves.”

“We have previously indicated that our regulators have identified various areas for improvement relating to our control environment and infrastructure,” the spokesperson said. "We are highly focused on addressing identified weaknesses in our U.S. operations."