Deutsche Bank will change the legal status of its main U.S. subsidiary to avoid having to endow it with up to $20 billion in fresh capital, the Wall Street Journal reported on Wednesday.
Citing an internal document at the bank, the Journal said that Deutsche Bank executives last year were concerned that U.S. unit Taunus Corp would need that amount to comply with the Dodd-Frank financial reform law that Congress passed last year in the wake of the financial crisis.
The restructuring would see Taunus give up its bank-holding company status, the paper cited unnamed sources as saying.
Under the plan, presented to the Federal Reserve last year, its banking unit Deutsche Bank Trust Corp would be moved out of Taunus and become a direct subsidiary of the German lender, the paper said.
Deutsche Bank's investment-banking business and several other nonbanking entities would continue to reside in Taunus, the paper said.
In its April 5 invitation to its annual general meeting on May 26, Deutsche Bank had said it would change the legal status of its U.S. branch offices to meet stricter capital requirements and reporting duties.
A spokesman for the bank declined to comment when called by Reuters, referring only the AGM invitation.
The group's shares were up 0.6 percent at 0902 GMT, in line with Germany's benchmark DAX <.GDAXI>.
The bank's Chief Executive Josef Ackerman said in early April that there was no need to raise the bank's capital, after it had carried out Germany's biggest capital hike in a decade in October.
At the time, the lender raised its equity by 10.2 billion euros ($14.76 billion) earmarked for buying the rest of Deutsche Postbank and meeting new bank capital rules.
As part of the U.S. reorganization, Deutsche Bank is asking its shareholders to approve a partial profit and loss transfer agreement between Deutsche Bank AG and Deutsche Bank Financial LLC, Wilmington, according to the AGM invitation.
The German lender's New York branch is to be recognized as an independent business entity and to be taxable as a corporation for U.S. federal income tax purposes, according to the invitation.
In March, the Bank prepared to bolster the equity buffer of its Spanish branch office after Spain demanded that Deutsche Bank inject more capital into the business.
(Reporting by Paritosh Bansal in New York, Edward Taylor and Ludwig Burger in Frankfurt; Edeiting by Mike Nesbit)