Banks should be allowed to repackage assets such as loans and sell them on to investors to maintain the flow of credit to the economy, said Deutsche Bank AG co-Chief Executive Officer Juergen Fitschen.
“We have to stop damning securitization,” Fitschen, who spoke in his capacity as head of the BdB Association of German Banks, told reporters at a briefing in Frankfurt yesterday. “We need this instrument again to mobilize capital.”
European Central Bank President Mario Draghi said last month that policy makers will consider ways to boost lending to small and medium-sized companies using asset-backed securities. The ECB is “right” to weigh that option and European companies will have to rely more heavily on investors for their funding needs in future, said Fitschen.
“We’re not going to get around sourcing a higher share of credit supply from capital markets in several European countries,” Fitschen said. “I’m not saying it’ll be at U.S. levels, but we have to move in that direction or the danger of banks not being able to supply the liquidity will be too high.”
Separately, Fitschen, 64, said European leaders must work on setting up a joint deposit protection mechanism to maintain stability in the euro area’s banking system. That process may take several years as other countries need to catch up with some of the safeguards German banks have in place, he said.
The BdB represents more than 210 commercial lenders in Germany including Deutsche Bank, according to its website.