Bloomberg News

Deutsche Bank’s Fitschen Calls Berlusconi Departure ‘Good News’

November 09, 2011

Nov. 9 (Bloomberg) -- Deutsche Bank AG’s designated co- Chief Executive Officer Juergen Fitschen said Italian Prime Minister Silvio Berlusconi’s plan to resign is “good news for Europe.”

Italy needs a “credible leader,” Fitschen said in an interview at a conference in Frankfurt late yesterday. He said he views Italy positively if it sticks to a plan to balance the budget by boosting tax revenue and cutting expenditures. “It is fatal to utter Italy and Greece in the same breath” because the two countries can’t be compared, Fitschen said.

Berlusconi offered to resign yesterday if Parliament approves austerity measures. Defections from his ruling party left him without a majority and bond yields surged to euro-era records. U.S. stocks, led by financial shares, and the euro rose on optimism a new leader will tame the nation’s debt crisis.

The yield on Italy’s benchmark 10-year bond jumped 11 basis points to 6.77 percent before the announcement, the most since the euro’s introduction in 1999 and near the 7 percent level that drove Greece, Ireland and Portugal to seek international bailouts. The premium investors demand to hold the debt instead of German bunds widened to a record 497 basis points.

Commerzbank AG Chief Financial Officer Eric Strutz, speaking at the same conference hosted by his bank in Frankfurt, said euro-area countries need to get deficits under control and a currency union can’t function without deeper fiscal integration.

‘Biggest Problem’

“Italy is the biggest problem,” Strutz said in a speech, citing the country’s debt of 1.9 trillion euros, which is bigger than the amounts in Greece, Spain, Portugal and Ireland combined. “Europe and the euro can be rescued.”

Deutsche Bank, Germany’s biggest bank, said on Oct. 25 its risks associated with Italian debt more than doubled to 2.25 billion euros ($3.11 billion) in the third quarter as the bank stepped up market-making, more than offsetting a reduction in other peripheral European nations.

Commerzbank’s risks related to the sovereign debt of Greece, Ireland, Italy, Portugal and Spain declined to 13 billion euros at the end of September from 14.7 billion euros three months earlier, it said on Nov. 4.

--Editors: Dan Reichl, Rick Green

To contact the reporter on this story: Aaron Kirchfeld in Frankfurt at akirchfeld@bloomberg.net

To contact the editor responsible for this story: Angela Cullen at acullen8@bloomberg.net


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