German bankers will face criticism as they oppose regulation they consider to be detrimental to banks and their clients, Deutsche Bank AG co-Chief Executive Officer Juergen Fitschen said.
“I’m very sure we’re going to take a beating from one or the other corner,” Fitschen, 65, who spoke in his capacity as president of the BdB Association of German Banks, told bankers at a conference in Berlin today. “We can and will handle it, but we need to make sure we’re thoughtful and not arrogant as some said we were before the crisis and even in the crisis.”
Regulators from Washington to Brussels have sought to prevent a repeat of the taxpayer-funded bank rescues that followed the 2007 meltdown of the U.S. housing market by ordering banks to raise capital and cease their riskiest activities. Bankers have since seen their ability to influence rule makers wane as fines for manipulating markets and improper sales of securities undermine trust in the financial industry.
Banks are struggling to regain the trust of German clients, auditor Ernst & Young said in an e-mail summary of a survey today. Six percent of more than 800 German consumer banking customers questioned said they currently have more trust in banks than a year ago while 38 percent said they trust banks less, according to the report. No margin of error was provided.
While a lack of trust is understandable given the past excesses and alleged wrongdoing by banks, they should be commended for having built up equity buffers and reviewing the ethical nature of their business, German President Joachim Gauck said in a speech at the BdB conference today. His role is largely ceremonial.
Fitschen cited the Basel framework of capital requirements and payments to a fund to shoulder the cost of winding down failed German lenders as regulation that banks have supported. The BdB opposes Germany’s plan to force banks to cut off some investment-banking activities from customer deposits as well as a proposed tax on financial transactions, he said.
Separately, banks will now assess the effect of standards the European Banking Authority, the European Union’s top banking regulator, proposed on March 31 for valuing trading book assets, Fitschen told reporters before the conference.
“Everyone needs to do their homework and see what it means for their company,” he said. “That will probably yield concrete results at some companies in coming days and weeks.”
The EBA’s new additional valuation adjustment standard may reduce Deutsche Bank’s capital by 2.2 billion euros ($3.04 billion) by the second or third quarter, Kian Abouhossein, an analyst at JPMorgan Chase & Co., wrote in an e-mailed report from London on April 3. He cut his recommendation on the stock to neutral from overweight.
Deutsche Bank is Germany’s largest bank.