The boss of the German bank, Christian Sewing sees the central banks with their possibilities at the end. "The central banks have hardly any funds to effectively combat a real economic crisis," said Sewing at a bank meeting in Frankfurt. "They have already turned the money on right up to the very end - especially the European Central Bank."
In view of the increasingly bleak outlook for the economy, the European Central Bank (ECB) has signaled that it intends to buy new bonds and to tighten its fine for bank deposits. Currently, the ECB is demanding 0.4 percent interest on parked money from commercial banks.
ECB President Mario Draghi hinted that this negative deposit rate could be further reduced - possibly at the next ECB meeting on 12 September. Puncture is designed to encourage banks to lend more and boost the economy.
"Interest rate cut will fizzle"
"On the macroeconomic level, another cut in interest rates will fizzle out at the current level, which will only drive asset prices higher and further burden savers," said Sewing. The ECB interest rate policy already weighs heavily on the industry.
"As Deutsche Bank alone, the negative deposit rates cost a high three-digit million amount this year, extrapolated to four years, well over two billion euros," said Sewing. "In the long term, these low interest rates are ruining the financial system."
Even a staggering of the penalty interest, discuss the currency guardians, would change nothing in the opinion of the Deutsche Bank chief on the basic problem. Sewing's conclusion: "The world is not well prepared for a serious economic crisis - and certainly not for Europe."
The head of the Swiss bank UBS, Sergio Ermotti, warned that nobody could seriously predict the long-term consequences of the low interest rate policy. For banks, this monetary policy is not good, but the consequences for the entire society should not be underestimated.
Further bank mergers possible in Europe
Mr Ermotti believes that mergers between Europe's banks are inevitable: consolidation is not the only way the banking system can get out of its problems. The problem is not that banks are so big that taxpayers have to rescue them in a crisis. The problem is rather that institutions are too small to survive.
Sewing, too, was fundamentally open to a reorganization of the banking industry in Europe. "We need the courage to consolidate in Europe, we also need larger banks, but the conditions must be right."
Commerzbank CEO Martin Zielke was also open to new mergers: "I would like to push ahead with consolidation in our fragmented market, if possible, and I would like to buy a savings bank." In the spring Deutsche Bank and Commerzbank had explored the possibility of a merger. However, the two institutes did not see any sense in a merger.
