European Banks need to defend their interest more vigorously against U.S. rivals: Deutsche Bank chairman

While Deutsche Bank has ruled out a merger or a bailout, its chairman has called for a more vigorous defence for European banks and cautioned that global banking rules, should not be lopsided.

German newspaper Frankfurter Allgemeine Sonntagszeitung has cited Deutsche Bank’s Chairman, Paul Achleitner as saying that a state bailout or a merger is ruled out. The comment comes in the wake of the bank settling with the U.S. DoJ, over its pooling of mortgage securities in the run up to the 2008 financial crisis.

“The management board in principle looks at everything that could help the business. At the moment, however, enthusiasm for a pan-European merger is muted as we have other priorities,” said Achleitner when asked why the bank will not merge Italy’s UniCredit or another lender.

Achleitner explained that Deutsche bank is trying to boost efficiency by simplifying its operations. The move will make its investment banking operations comply with regulatory and political rules.

Both, the European Central Bank and Germany’s Bundesbank have called for more consolidation in the banking sector, stating that there are still too many banks, despite a steady fall in their numbers since the financial crisis.

Achleitner however said, putting a higher capital requirements is likely to put European banks at a competitive disadvantage vis-a-vis their U.S. counterparts.

Recommendations by supervisors from EU’s Basel committee have called for tighter capital requirements to avert a repeat financial crisis.

“The global rules, established with the Basel accord, must not one-sidedly reflect the views of the Americans,” said Achleitner.

In the United States, state-sponsored bodies, including Fannie Mae, partly help lenders to shed the risks of mortgages. This is however not done in Europe.

European banks need to defend their interests more vigorously against their U.S. rivals.

“It’s obvious that national interests are increasingly being defined and represented in a more robust fashion,” Achleitner said. “It’s about time that we Europeans stand up for our interests too.”

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Categories: Regulations & Legal, Strategy

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