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Deutsche CEO attacks IMF over recapitalisation

The Local · 5 Sep 2011, 16:24

Published: 05 Sep 2011 16:24 GMT+02:00

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Christine Lagarde, the new head of the International monetary fund, said she believes it "necessary to recapitalise European banks so that they are strong enough to withstand the risks linked to the debt crisis and weak growth."

Recapitalisation was required "to avert contagion" of the problems, she told Der Spiegel news weekly.

But Ackermann lashed out, telling a banking conference in Frankfurt on Monday: "The recent proposal for a forced recapitalisation of the European bank sector hasn't really come to much."

The Deutsche Bank CEO said that "a forced recapitalisation would give the signal that politicians do not themselves believe in the measures" they have implemented to bolster fragile eurozone countries.

Lagarde's proposals were "counterproductive" as they exacerbated the eurozone debt crisis and scared investors, Ackermann added, as European banking shares dived on the markets amid concerns that Greece's reform programme was coming apart.

Meanwhile, in Paris, the president of BNP Paribas, Michel Pebereau, said: "It's not obvious that the European banking system as a whole needs to be recapitalised."

As the row erupted, banking stocks continued to take a hit, with Deutsche Bank shares down nearly eight percent in mid-day trading in Frankfurt. Commerzbank was also suffering, down five percent. The wider DAX index of Germany's 30 leading companies was down 3.5 percent.

Story continues below…

Deutsche Bank shares were also under pressure as a result of a report in the Financial Times that Britain's Serious Fraud Office was looking into some of bank's deals.

AFP/The Local/mry

The Local (news@thelocal.de)

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Your comments about this article

16:52 September 7, 2011 by storymann
DB is going to battling civil and criminal litigation for the foreseeable future.

There are some economist and banking experts that predict the banking sector world wide is going to be greatly reduced in the near future.

Banks no longer need all those branches to attract customers, people are now using online banking and this is increasing at a rapid rate.You can qualify for loans and make deposits with out ever entering the bank.

There again she is generalizing hopefully not by suggesting removing preferred shares from the company's capital structure and replacing them with bonds.
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