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FRANKFURT, Nov 9 (Reuters) – Deutsche Bank (DBKGn.DE) on Wednesday added its voice to the financial industry’s recent criticism of the European Central Bank, with the German lender’s finance chief saying authorities should do more to champion banks.
The ECB and other institutions “should be moving to championing the banks to help the economy rather than not,” Chief Financial Officer James von Moltke said at a financial conference hosted by Switzerland’s UBS.
In recent days, media have reported on tensions between the ECB and some of the banks it oversees as their regulator in Europe, including differences over UniCredit’s capital distribution plans and presence in Russia.
Deutsche Bank, one of the world’s most important for the global financial system, has for years been under the watchful eye of its regulators in the wake of multi-billion dollar fines for its role in the U.S. mortgage crisis and money laundering lapses.
Those costs, on top of others to build up internal controls at regulators’ behest and put money aside for rainy days, have come as the bank has restructured to restore its profitabilty.
CFO von Moltke was asked at the conference, streamed from Deutsche’s own website, what the lender’s gripes with the ECB were.
He initially said he wouldn’t comment but then went on to address a number of critical points.
Deutsche’s CFO said the ECB was “late” to raise interest rates.
He also said “we are highly critical” of a decision to change the terms of a loan program, known in banking jargon as TLTRO, that acted as a subsidy for banks.
The ECB has justified its rate and loan policies as appropriate for bringing down inflation, which is now double digit, to its 2% target.
Von Moltke also made clear that Deutsche Bank differed with the central bank over its own leverage lending business, something the CFO said was “a key part of what we do”.
ECB bank supervisors have been telling banks to cut down on leverage finance where credit is extended to already indebted borrowers.
The CFO also regulators needed to give banks a stable capital environment to plan and provide credit to the economy.
“Our capital environment has been anything but stable over the last few years,” he said.
“Very often we get lost in rules and models and limitations and risk assesements, and we aren’t letting the banking industry do what it should do….be an engine of the economy,” he said.
Reporting by Tom Sims; additional reporting by Francesco Canepa; Editing by Miranda Murray and Elaine Hardcastle
Our Standards: The Thomson Reuters Trust Principles.
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