Bankers must find ways to help regulators build a more resilient financial system and regain the credibility lost during the industry’s crisis, according to Paul Achleitner, the chairman of Deutsche Bank AG.
Past misdeeds are limiting bankers’ ability to advise policy makers on regulation, to the detriment of the financial system, Achleitner said in a speech in Frankfurt today.
“The banking industry has lost so much of its credibility that whenever it voices any of its opinions, it is discarded by the way as being pure lobbyism, pure self interest,” he said. Bankers need to find ways to supply “those aspects that are factual and relevant,” said Achleitner, 57, who oversees the Frankfurt-based lender’s supervisory board.
His comments follow remarks last night by German Finance Minister Wolfgang Schaeuble, 71, who said policy makers need input from bankers in their quest to develop rules to protect the financial system from crisis shocks.
Schaeuble clashed with Deutsche Bank co-Chief Executive Officer Juergen Fitschen last month when he said “banks still show great creativity in evading regulation” in an interview with Handelsblatt. They later assuaged their differences in a telephone call, according to the newspaper.
“Help us, but don’t just put your energy and competence into fighting new rules,” Schaeuble said in a speech yesterday at an event hosted by Deutsche Boerse AG, Frankfurt’s stock exchange operator, on the outskirts of the German financial capital. “We need to master this together to reduce risks as we may not be able to emerge from the next bubble or crisis like 2007-2008 with as little damage.”
Deutsche Bank, Germany’s biggest bank, is among financial institutions paying to settle probes and lawsuits alleging that they sought to rig benchmark interest rates for their own profit or misled clients over the quality of products tied to U.S. mortgages.
Their behavior has prompted regulators to impose new rules aimed at preventing a repeat of the bank rescues that followed the 2008 collapse of Lehman Brothers Holdings Inc. Deutsche Bank two days ago forecast a “challenging” 2014 after a surge in legal costs spurred a surprise fourth-quarter loss.
Achleitner, who dined with Schaeuble at the Deutsche Boerse event, said today that both regulators and bankers want a more stable financial system.
He repeated his view that a proposal made by a group advising the European Commission to order banks to split trading from those parts of their operations that take deposits hasn’t been thought through.
Regulators should focus on rules that allow banks to take account of the risk of their assets when calculating their capital strength rather than the so-called leverage ratio, which considers total assets, Achleitner said.
Deutsche Bank, Europe’s largest investment bank by revenue, spent 2.5 billion euros ($3.4 billion) on legal costs last year and had 2.3 billion euros set aside for additional such expenses at the end of December, the company said Jan. 19.