Deutsche Bank’s Fitschen Says ECB Test Won’t Solve All ProblemsNicholas Comfort and Jeff Black
German banks will need to address their weaknesses even if most of them pass the European Central Bank’s Comprehensive Assessment, said Juergen Fitschen, co-chief executive officer of Deutsche Bank AG.
“If you listen to the news on Sunday and hear, as will probably happen, that all German banks have survived the stress test, with the exception of some smaller banks mainly in the southern region, don’t then assume that everything is fine,” Fitschen, who is also president of the BdB Association of German Banks, said at an event in Berlin today.
On Oct. 26, the central bank and national regulators will publish the findings of their review of the balance sheets of 130 banks and stress tests of their ability to withstand losses in times of economic stress.
To pass, banks must show they can maintain a ratio of common equity Tier 1, a measure of a bank’s ability to absorb losses, to risk-weighted assets of 8 percent under current conditions and 5.5 percent under a simulated slump.
“We need years to return to a new normality,” Fitschen said. “We all have to face the same issue which leads to the question we’re no strangers to in Europe: how do we maintain sustainable competitiveness in a rapidly changing world.”