Not “business as usual” for banks: Deutsche Bank CEO
Written on September 4, 2009
Deutsche Bank Chief Executive Josef Ackermann said on Thursday banks had learned from the credit crisis and adapted but warned that a trend toward boosting national financial regulations could lead to regulatory arbitrage or market fragmentation.
Ackermann, who also chairs the Institute of International Finance, a cross-border banking lobby, said banks had made good progress with reforms and had not lapsed back in to old habits.
“To say it’s business as usual again does not match the facts,” Ackermann said, speaking at a conference in Frankfurt.
As markets have rebounded this year after the deepest financial crisis since World War II, banks have come under renewed fire from politicians for offering bonuses reminiscent of the boom years.
German Finance Minister Peer Steinbrueck said in a newspaper interview on Thursday that the banking lobby in the UK and Germany was trying to undermine government reform plans.
However, Ackermann said recalibrated risk models that account for extreme market fluctuations, simpler financial products and overhauled stress tests are among the lessons learned from the crisis.
The bonus culture too had changed, Ackermann said.
“Compensation models have been adjusted to align them more closely with sustainable profitability and shareholder’s long-term interests,” he said.
An industry-wide trend to withdraw from foreign subsidiaries in order to strengthen a parent company’s capital base at home posed a threat to internationalization of financial markets.
A move to re-nationalize financial supervision of markets posed a similar threat, he said, adding that regulations from various jurisdictions may not be compatible and lead to the risk of “regulatory arbitrage” or market fragmentation.
(Reporting by Edward Taylor and Jonathan Gould; Editing by Greg Mahlich)
Filed in: money.