Josef Ackermann, CEO of Deutsche Bank, warned that growth potential in the European financial sector is “bound by a mounting debt burden of sovereign and private debtors” and that real estate and retail financing in Europe is likely to “remain subdued”. Deutsche Bank is attempting to combat this rising issue by taking over market shares, examples of which, said Ackermann, is the lender’s recent attempt to take over Deutsche Postbank, private bank Sal. Oppenheim and parts of the Dutch bank ABN Amro. The CEO also said that Deutsche Bank itself might need to shed jobs if recent trends continue. The lender will “consider job cuts if markets don’t improve in September and beyond,” he said.
Ackermann also warned that many European banks would not be able to absorb losses from sovereign bonds if securities were valued in line with market prices, but emphasized that he does not believe that a forced recapitalization of the sector is necessary or appropriate. International Monetary Fund director Christine Lagarde called for such a recapitalization in late August.
How do you think the European banking struggles will affect the United States?
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