Deutsche’s Ackermann calls for European financial safety net

Deutsche's Ackermann calls for European financial safety net
Photo: DPA
Europe should prepare a financial markets safety net similar to one being cobbled together in the United States, the head of the biggest German bank, Deutsche Bank, said on Wednesday.

“If the United States has a rescue plan, Europe should be ready to offer similar solutions” in the event of an emergency, Deutsche Bank’s CEO Josef Ackermann said according to Dow Jones Newswires.

Private banks and governments should be able to respond to “systemic risks” to financial markets, the German banker said.

Some economists have warned that leading European banks have high leverage ratios of total assets to shareholders’ equity, which in the event of trouble could mean they would need help similar to that extended to banks in the United States, Iceland, Ireland and the Benelux countries.

The German government said on Wednesday it expects swift approval by the European Commission of a rescue plan for property lender Hypo Real Estate.

“We are sure of … a swift and positive response by the European Commission,” a Financy Ministry spokesman told a press conference. He said the German plan was “no different from what has been done recently in the Benelux countries or Great Britain,” in reference to bailouts of the Franco-Belgian bank Dexia and British lender Bradford & Bingley.

On Monday, the German government and private banks unveiled a rescue plan for Hypo Real Estate, the future of which nontheless remains uncertain.

Berlin is to guarantee a large part of a €35-billion ($50-billion) credit line drawn up to keep Hypo Real Estate in business.

In Brussels meanwhile, the Commission said it was opening an in-depth investigation into the German government’s rescue plan for another German financial institution, the regional bank WestLB.