Regulation threatens Europe's banking system: Deutsche Bank CEO

Tue Jun 11, 2013 1:35pm EDT
 
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By Edward Taylor

FRANKFURT (Reuters) - An overload of global regulation threatens to stifle Europe's banking system and constrain economic growth, Deutsche Bank AG (DBKGn.DE: Quote) Co-Chief Executive Anshu Jain warned on Tuesday.

"Over the past five years, the banking industry has reformed itself, and been reformed, at an unprecedented pace. But now, in Europe, there's a risk the pendulum may swing too far," Jain told an audience at Frankfurt University's Centre for Financial Studies.

"If all the measures before us were implemented as proposed, they would practically spell the end of over 100 years of universal banking in Europe," Jain said.

Universal banks are lenders with diversified business models which often combine retail banking, investment banking and wealth and asset management activities. Having a diverse set of business activities helps banks withstand market disruptions, Jain added.

"I am not questioning the importance or needs for governments to regulate banks or other large businesses," said Jain, who has been co-chief executive for just over a year. But the cumulative impact of new rules may cripple the ability of banks to provide loans to the real economy, he said.

In the aftermath of the 2009 G20 summit in Pittsburgh, which helped inspire a comprehensive re-regulation of the banking sector, the supply of loans to the economy suffered in Germany.

Lending to German businesses by foreign banks fell by 30 percent in the two years following the 2008-2009 financial crisis, Jain said.

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Anshu Jain, Co-chief Executive of Deutsche Bank speaks during a shareholders meeting in Frankfurt, May 23, 2013. REUTERS/Ralph Orlowski