US MORTGAGE SETTLEMENT
Deutsche Bank chief rules out merger
The leading European bank paid a $7.2bn settlement with the US justice department over its sale and pooling of mortgage securities
Berlin — Deutsche Bank chairman Paul Achleitner ruled out a European merger or a state bail-out after the lender’s mortgage settlement with the US department of justice, the Frankfurter Allgemeine Sonntagszeitung newspaper reported.
The bank last week announced a $7.2bn settlement with the US justice department over its sale and pooling of mortgage securities in the run-up to the 2008 financial crisis.
"The management board in principle looks at everything that could help the business," Achleitner said in an interview published on Sunday.
"At the moment, however, enthusiasm for a pan-European merger is muted as we have other priorities," he said, when asked why Deutsche does not merge with Italy’s UniCredit or another lender.
Deutsche, which was trying to simplify its operations, would keep its investment banking operations and ensure they complied with political and regulatory rules, Achleitner said.
Supervisors including Germany’s Bundesbank and the European Central Bank have called for more consolidation in the banking sector, saying there are still too many banks despite a steady fall in the number of branches since the 2008 crisis.
Higher capital requirements would put European banks at a competitive disadvantage to their US rivals, Achleitner said, referring to efforts by the Basel committee of supervisors to tighten bank capital rules to avoid a repeat financial crisis.
"The global rules, established with the Basel accord, must not one-sidedly reflect the views of the Americans," Achleitner said.
The former finance chief of Allianz said European banks needed to defend their interests more vigorously against rivals in the US where lenders were helped by state-sponsored bodies, allowing them to shed part of the risk of mortgages.
"It’s obvious that national interests are increasingly being defined and represented in a more robust fashion," Achleitner said. "It’s about time that we Europeans stand up for our interests too."
Separately, Achleitner said government aid for players in the financial industry would not become an issue in Germany.
"No one in Germany needs to worry about rescuing banks," said Achleitner, who confirmed he would stand for re-election as chairman at the bank’s annual general meeting in May.
By contrast, the Italian government has earmarked €20bn to bolster its ailing lenders.
The Bank of Italy said last week that total costs for the state bail-out of Banca Monte dei Paschi di Siena would come to about €6.6bn.