Deutsche Bank CEO Just Gave A Terrifying Speech In Frankfurt

Courtney Comstock
Business Insider
9/5/2011

Josef Ackermann just gave a terrifying speech about the fragility of the Euro banking sector right now.

At a conference in Frankfurt he said, “It is an open secret that numerous European banks would not survive having to revalue sovereign debt held on the banking book at market levels.”

The implication is that not just Eurozone countries are buckling under the pressure of Greece’s, France’s, and Italy’s debts, but banks are too. It sounds like a desperate call for a bailout. Now.

“All this reminds one of the autumn of 2008,” said Ackermann. “We should resign ourselves to the fact that the ‘new normality’ is characterized by volatility and uncertainty.”

Some hedge funds, like in 2007 and 2008, saw the enormity of the Eurozone debt crisis and began betting against Euro banks and other companies that have exposure to the crisis earlier this year. Their profits have already started to pay off.

As for the rest of the financial industry, things don’t look good.

Here’s what Ackermann sees: “Prospects for the financial sector overall… are rather limited.”

“The outlook for the future growth of revenues is limited by both the current situation and structurally.”

And solutions to the Eurozone crisis and corresponding Euro banking crisis remain unsupported or nonexistent.

Ackermann duly shot down one of the solutions suggested by IMF head Christine Lagarde.

He said recapitalizing the banks urgently, as Lagarde suggested, would be “counterproductive.”

“A forced recapitalization would give the signal that politicians do not themselves believe in the measures” they are negotiating.

Sounds like Ackermann just sounded the alarm. There is now a full-on Euro banking crisis.

 

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