Deutsche Bank May Take More Heat From Regulators This Summer: DealBook Briefing

The Fed's censure, according to the Journal, stemmed from concerns about Deutsche Bank's procedures for measuring its exposure to its clients and for valuing the collateral backing its loans. Regulators require efficient and accurate controls so that banks can assess their financial strength and the risks they face, especially through difficult times in the economy. Subpar controls could hamper Deutsche Bank's ability to pass two crucial upcoming tests in the U.S. The first is the Fed's stress tests, which are used to determine whether large banks can survive a severe economic downturn. Until now, only Deutsche Bank's small U.S. trust bank had gone through the tests – and even that failed. Commenting on the 2016 test, the Fed slammed the subsidiary for continuing "to have material unresolved supervisory issues that critically undermine its capital planning process." The entity did not get tested last year because of a rule change.