Cryan Urges EU Harmonization to Keep Up With `American Machine'

  • European banks say they need harmonized rules to compete
  • “Real risk that German banks will be at a disadvantage”

Europe needs to push ahead with plans to harmonize capital markets and regulation or risk losing out to American competitors, Deutsche Bank AG’s Chief Executive Officer John Cryan said Thursday.

“It’s important from a global perspective that Europe build a counterpoint to the American capital markets machine,” Cryan said at a conference hosted by the German Banks Association in Berlin. If Europe can create a more unified financial market “we put ourselves on a better footing to be able to compete with the American machine,” Cryan said.

Europe’s investment banks, reeling from a loss in market share to U.S. competitors that were quicker to raise capital and dump toxic assets after the 2008 financial crisis, have complained for some time that the region’s fragmented capital markets put them at a disadvantage. Marcus Schenck, who was named last month to co-head Deutsche Bank’s investment bank, has said that if regulation in the U.S. is rolled back, banks there would gain even more of an edge.

“There is a real risk that German banks will be at a disadvantage to American ones if we don’t see greater European harmonization while there is increasing de-regulation in the U.S.,” Hans-Walter Peters, president of the Association of German Banks, said at the conference.

Failed Merger

The failed merger between Deutsche Boerse AG and the London Stock Exchange Group Plc was another example of European fragmentation that would yield benefits to the Americans to the detriment of European banks.

“I fear that as a consequence of the deal not going ahead, we’ll just see the Americanization of capital markets” continue, Cryan said.

Two senior European policymakers at the conference, Bundesbank President Jens Weidmann and European Union Commission Vice President Valdis Dombrovskis, said they are aware of the burden placed on banks but stressed that they shouldn’t expect too much in the way of regulatory relief.

“There must be no rollback of reforms,” said Dombrovskis. “But we are ready to assess our rules, look for possible missing links or overlaps, and adapt them if needed.”

    Before it's here, it's on the Bloomberg Terminal.