According to sources cited in a Reuters report, Deutsche Bank chairman Paul Achleitner has ruled out a European merger or state bailout after the lender’s mortgage settlement with the US Department of Justice.
Germany’s biggest bank recently announced a $7.2 billion settlement with the US Department of Justice over its sale and pooling of mortgage securities in the lead-up to the 2008 financial crisis.
After being questioned as to why Deutsche does not merge with Italy’s UniCredit or another lender, Achleitner said: “The management board in principle looks at everything that could help the business but at present, enthusiasm for a pan-European merger is muted as we have other priorities.”
“Deutsche, which is trying to simplify its operations to make it more efficient, will keep its investment banking operations and ensure they comply with political and regulatory rules.”
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No one in Germany needs to worry about rescuing banks.
Germany’s Bundesbank and the European Central Bank have called for more consolidation in the banking sector, saying there are still too many banks despite a steady fall in the number of branches since the financial crisis.
According to Achleitner, higher capital requirements would put European banks at a competitive disadvantage to their US rivals, referring to efforts by the Basel committee of supervisors to tighten bank capital rules to avoid a repeat financial crisis.
He added that European banks needed to defend their interests more vigorously against rivals in the United States where lenders are helped by state-sponsored entities such as Fannie Mae, allowing them to remove themselves from part of the risk of mortgages.
Achleitner said government aid for players in the financial industry would not become an issue in Germany. “No one in Germany needs to worry about rescuing banks,” he commented.
By contrast, the Italian government has set aside 20 billion euros ($21 billion) to bolster its ailing lenders after the Bank of Italy confirmed that total costs for the state bailout of Banca Monte dei Paschi di Siena would fall in the region of 6.6 billion euros.