Deutsche Bank AG (DBK) co-Chief Executive Officer Juergen Fitschen said German Social Democrat chancellor candidate Peer Steinbrueck’s plan to split the firm’s securities unit from its consumer bank would cut funding for companies.
“If this system is implemented, Mr. Steinbrueck, the one part will require so much more capital that it won’t be able to deliver,” Fitschen said today at a conference with Steinbrueck in Berlin. “Not just the conditions, but liquidity for mid- sized companies, which also rely on it, would be limited.”
Steinbrueck, who will challenge Chancellor Angela Merkel in elections next year, has called for Deutsche Bank to protect taxpayers and depositors by creating a firebreak around its investment bank. Fitschen said that while he shares Steinbrueck’s desire to create a stable environment for banks to provide credit to companies and consumers, handicapping the unit would harm Germany as an export-oriented economy.
“Let’s not kid ourselves, the tendency will be that banks reduce balance sheets, become notably more careful on returns goals, that some business becomes more expensive and that also conditions and credit deteriorates for the real economy,” said Steinbrueck. “But no one in this room should have the impression that things would go on as they had until now.”
Steinbrueck, a former finance minister who spearheaded bank rescues, proposed last month that Deutsche Bank divide individual businesses under one holding in order to continue to offer investment banking services to clients.
“What’s being called devilish is essential for the Mittelstand,” Fitschen said, referring to the importance of the investment bank’s services for Germany’s mass of small and mid- sized companies. “The same people lambasting derivatives use them for their own purposes on a daily basis.”
Separately, Fitschen said that while he considers the formation of a common European banking regulator next year to be possible, leaders should implement joint deposit protection in the “mid-term.”
“It is a very sensitive issue,” he said. “It is the right idea, but we have to implement it with the appropriate patience because if we’re too hasty, we’ll damage ourselves.”
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