The head of Deutsche Bank has called for greater supervision for shadow banking, warning that the sector poses ‘bank-like risks’ and should have a clear regulatory framework.
Anshu Jain, co-chief executive of Germany’s largest bank by assets, said at a banking conference in Frankfurt that while shadow banking performed a “highly important function”, it required appropriate supervision, reports the FT’s Alice Ross.
He said: “The shadow banking sector must be able to give clear responses to regulators on key questions with respect to balance sheet, capital and conduct, and this requires a clear regulatory framework.”
Mr Jain’s comments come as Deutsche Bank, along with other large eurozone lenders, are being probed by the European Central Bank in a fresh round of stress tests set to determine the health of Europe’s banking sector.
Shadow banking can include hedge funds, traditional asset managers or unregulated institutions that invest their own money but also perform bank-like activities such as lending. The Financial Stability Board recently estimated that the global market is worth $35tn.
Mark Carney, head of the Bank of England, recently wrote in the Financial Times that it was time “to take shadow banking out of the shadows”, arguing that while much had been done to stabilise shadow banking, “the job is not yet complete”.
