GLOBAL finance leaders issued a fresh warning on economic stability for the EU today, slamming the huge U.S. fine for Deutsche Bank as a mass destabilisation of Germany’s largest bank.
Jeroen Dijsselbloem, the chairman of euro zone finance ministers, said that the U.S. Department of Justice’s demand that Deutsche Bank pay $14 billion for its role in the sub-prime mortgage crisis is too big and will undermine financial stability.
“Let’s hope it is an opening bid,” Dijsselbloem said on the sidelines of the International Monetary Fund and World Bank annual meetings in Washington. “These kinds of fines are completely oversized, and they are damaging to financial stability.”
Deutsche Bank has been struggling to overhaul its business model that is built around trading activities that have become much less lucrative under new regulation enacted since the 2008-2009 financial crisis.
“Here is a financial institution which needs to be restructured and strengthened and needs to bring in new capital and we cannot then have an even bigger amount of capital being pulled out by the American authorities. That is really counterproductive to put it mildly,” Dijsselbloem said
German Finance Minister Wolfgang Schaeuble earlier said that a new financial crisis could not be ruled out and that the IMF is backing up his longstanding warnings about the risks to the banking system from “ultra-loose” monetary policy.
“The danger of a new crisis has not completely vanished,” Schaeuble said.
Full article: US fine for Deutsche Bank will DESTROY EU economy stability, warns Eurozone finance chief (Express)