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Deutsche Bank boss warns crisis could kill weak banks

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Deutsche Bank boss warns crisis could kill weak banks

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Europe’s sovereign debt crisis will cut bank’s profits for years and could even kill off some of the weakest ones.

That warning has come from the head of Germany’s biggest lender – Deutsche Bank.

Josef Ackermann told financial industry bosses that many European banks could go under if they are forced to accept reduced repayments of their loans to euro zone governments.

He also rejected the IMF’s call for banks to be forced to hold more capital: “The recent proposals for a compulsory capitalisation of the European banking sector were not useful at all. It is stating the obvious that many European banks would not survive having to revalue the government bonds they hold on their books at market levels.”

Athens wants private investors to swap their current Greek government bonds for other bonds that will pay less interest over a longer term.

Ackermann also said banks need to reevaluate their role in the real economy and the usefulness of some of the services they provide.