Josef Ackermann, the CEO of Deutsche Bank, is now getting more than flack for continuing to argue that capitalising the banks in order to prepare them for the consequences of the Euro crisis is not a solution.
In an article in The National, there is a suggestion that German politicians would “relish” breaking up Deutsche Bank after Ackermann’s recent remarks.
Background: Lagarde first suggested that banks needed urgent recapitalization this summer.
Ackermann, who is viewed as the second most powerful person in Germany after Angela Merkel, rebutted the idea publicly in early September.
Now, a fire-spitting article in The National says: “[Ackermann] does not appear to have fully grasped how quickly the world is changing outside the shining glass facades of his twin-towered headquarters in Frankfurt.”
The problem people seem to have is with Ackermann seems to be summed up in this statement he made to German business leaders in Berlin this month:
“The problem isn’t the capital base of banks but the fact that government bonds have lost their status as risk-free assets.” (If anyone has a copy of the full speech, which we searched for but failed to find, please let us know.)
Oddly, the National assumes that this implies Ackermann’s insisting that he does not need capital in the event of a Greek debt writedown near 50%. Actually, he said quite the opposite last month. He said plainly that many Euro banks would not survive given a debt write-down to market levels.
Might his statement, then, just be an indication that Ackermann has a different view of how the solution should be solved that doesn’t include the intervention of central bankers and monetary policy?
The National instead views this statement as a matter of Ackermann’s pride. They write: “refusing state interference is a matter of personal pride.”
(Interestingly, he has plans to step down soon and pass the Deutsche reigns to Anshu Jain and Juergen Fitschen. Other Euro bank CEOs involved in the resolution discussions, and Angela Merkel, might have a considerably less detached and objective opinion of how to solve the crisis.)
Regardless, Ackerman’s statement last week, has clearly enflamed many. The last sentence of The National article reads like a threat to break up Deutsche Bank:
After Mr Ackermann’s vocal criticism last week, German politicians may relish the prospect of hacking his bank in half. It would be a powerful message that would resonate with the public: elected governments, and not banks, call the shots.
This can’t be a serious threat, but it sure looks like one.