Overview of the Deutsche Bank

The case of Deutsche Bank and the Road to Basel III explains how changes in the new
implementation of the updated regulatory framework, which is Basel III, will affect the results of
Deutsche Bank. The Basel Committee has begun to develop a new model, the main goal of
which is to increase the transparency and quality of the entire banking institution. The new
framework was approved in 2010 and will be phased in in 2013, with full implementation of the
framework in 2019.
Basel III was supposed to change and improve rules, risk management and supervision of
financial institutions. The main area covered by Basel III is capital requirements, which are
divided into two parts - tier 1 and tier 2. The first tier consists of ordinary capital and additional
tier 1 capital, in which the total tier 1 capital has been increased from 4.0 % to 6.0%, while the
risky asset had a weight of 9.5% to 13.5%. This meant that Deutsche Bank would face certain
challenges in 2013, as well as gaining new opportunities through the implementation of Basel III.
Investors were worried that Deutsche Bank would have to raise equity capital to meet capital
requirements. This will reduce the profitability of Deutsche Bank in the future. Basel III changes
will lead to an increase in the weight of risky assets, while the return on equity of the banking
sector will decline.
In July 2012, thanks to the implementation of Basel III, Deutsche Bank was able to cope with the
problems, as its overall level ratio was 13.6%, which was based on assets with a risk weight,
which are estimated at about 373 billion euros, according to Basil II ... ... In early 2013, Deutsche
Bank was able to increase its risk-weighted assets to € 488 billion and its core ratio to 7.2%,
dropping it from 10.2% in accordance with Basel III rules. Basel Level 1, which required Basel
III to reach 9.5% before Basel III rules are fully implemented by 2019. they have an excellent
position in the German domestic market. Deutsche, seeing the benefits of investment banking in
the marketplace, switched to investment banking.
This allowed it to take a leading position in the European retail market and led to increased
revenues for Deutsche Bank. During 2012, in July, Deutsche Bank held the largest market share
in the United States and also ranked first on the European Equity Research platform. In July
2012, the Bank's shares traded at 8.2. x (P / E ratio), and the book value of one share calculated
through P / TB was 0.60x. The P / E ratio was increasing compared to 2010-2012 of the previous
year, while the P / TB ratio was decreasing compared to the previous 2011.

The opportunities that the Deutsche Bank gains from Basel III:
  The increase in total Tier 1 capital gives Deutsche Bank the ability to issue more of its
shares to the public. The total capital of the first tier was increased from 4.0% to 6.0%.
 Global players are leaving the banking industry and Deutsche has an opportunity to
improve its public relations. The bank may announce that it remains committed to the
business, which will be good news for clients.
 The increase in the weight of risky assets will result in the bank taking more risks in
relation to its investment business, accepting more securities, options, futures and
forwards to increase its profitability.

The challenges that the Deutsche Bank gains from Basel III:
 Increasing the leverage and coverage ratio or liquidity of a bank from 4% to 4.5% means
that banks must retain a certain amount of liquid collateral, such as money, to be able to
withstand during financial downturns.
 Basel III is currently being implemented in European countries, and Japan has also
recently implemented it in its financial institution. But in the US, the implementation of
Basel III is delayed, which could create problems for Deutsche Bank.
 The Basel III changes will lead to a significant decrease in the return on equity for the
entire banking industry.