Jain Says Europe ‘Unlikely’ to Repeat Cyprus Savings Levy
European Union leaders probably won’t repeat a tax on deposits planned for Cypriot banks, said Deutsche Bank AG (DBK) co-Chief Executive Officer Anshu Jain.
“We see near-term contagion risk as limited and it is unlikely to be a model for other EU states,” he said in a speech at a conference in Frankfurt today. “As a precedent, it does widen the scope for bail-ins in a way which could negatively affect investor sentiment if another peripheral country were to get into difficulty.”
The EU announced the unprecedented tax three days ago as part of a bailout of the Mediterranean island, wracked by the debt crisis and losses made by Cypriot banks on Greek debt. The decision sent financial stocks including Deutsche Bank tumbling on concern it may reignite the sovereign debt crisis or hurt banks’ credit ratings.
Moody’s Investors Service said yesterday that the levy, which the Parliament in Nicosia is due to consider today, may hurt the confidence of European savers and limits support for bank creditors in the region.
Jain said the chances of a “dramatic event” in Europe have receded, though growth is going to be slow for a long time.
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