Deutsche Bank’s chief economist is urging the European Union to set up a 150 billion euro rescue fund to recapitalise European banks.
David Folkerts-Landau, in an interview with German newspaper Die Welt, said that is needed to cope with “one crisis after another” even as the European Central Bank’s negative deposit rates and low share prices made it hard for banks to bring in new investment capital.
“I can, by no stretch of the imagination, make out growth prospects anywhere,” Folkerts-Landau said, adding: “Europe is extremely sick and must start dealing with its problems extremely quickly, or else there may be an accident.
He told the newspaper: “I’m no doomsday prophet, I am a realist.”
Folkerts-Landau continued: “I do not expect a second financial crisis like in 2008. The banks are much more stable today and have more equity. What we face this time is a slow, long downward spiral.”
He said particular attention has to be paid to Italy, where banks have 350 billion euros in bad loans.
And he warned that will probably get worse: “Likely, this will only be the lower limit.”