The European Central Bank has lowered the common equity tier 1 (CET1) ratio required for the largest German bank, Deutsche Bank AG (USA) DB 0.05%. CET1 capital includes common shares of stock, stock surpluses, retained earnings and accumulated other comprehensive income. The CET1 ratio is the ratio of CET1 capital to risk-weighted assets on a bank’s balance sheet.
It’s All About The Ratio Balance
Deutsche Bank’s current minimum CET1 ratio is 10.76 percent. The ECB has assigned a new minimum ratio of 9.51 percent beginning in January.
In order for Deutsche Bank to distribute employee bonuses or shareholder dividends, it must maintain a CET1 ratio above the ECB’s threshold.
Deutsche Bank last paid a $0.807 dividend in 2015. The bank then notified shareholders that it would be suspending dividends for two years in an effort to shore up its balance sheet. Starting in 2017, the bank has promised a “competitive payout ratio” in future years.
From 2013 through 2015, Deutsche Bank had a dividend yield of between 1.5 percent and 3.5 percent.
Market Reaction
The market seems disappointed with the ECB’s decision. Deutsche Bank stock was…
Click here to continue reading
Want to learn more about how to profit off the stock market? Or maybe you just want to be able to look sophisticated in front of your coworkers when they ask you what you are reading on your Kindle, and you’d prefer to tell them “Oh, I’m just reading a book about stock market analysis,” rather than the usual “Oh, I’m just looking at pics of my ex-girlfriend on Facebook.” For these reasons and more, check out my book, Beating Wall Street with Common Sense. I don’t have a degree in finance; I have a degree in neuroscience. You don’t have to predict what stocks will do if you can predict what traders will do and be one step ahead of them. I made a 400% return in the stock market over five years using only basic principles of psychology and common sense. Beating Wall Street with Common Sense is now available on Amazon, and tradingcommonsense.com is always available on your local internet!
