Germany’s largest lender, Deutsche Bank, will not suffer the same fate as the embattled Credit Suisse, German Chancellor Olaf Scholz told journalists at a press conference in Brussels on Friday, after the bank’s shares fell by 15% in one day.
“Deutsche Bank has fundamentally modernized and reorganized its business model and is a very profitable bank,” Scholz said. “There is no reason to be concerned about anything.”
The chancellor was speaking following talks with EU leaders and European Central Bank (ECB) President Christine Lagarde. Friday also saw worries about the European banking sector, leading to Deutsche Bank’s shares falling by record numbers.
The concerns were in part sparked by the emergency rescue of Credit Suisse by the Swiss government. The embattled bank was taken over by UBS Group as part of the deal.
European bank stocks plummet
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UBS Group’s shares also fell – by 6% on Friday. The developments were provoked by a sharp spike in credit default swaps on Thursday night. Shares of Germany’s Commerzbank and France’s Societe Generale also dropped by 9% and 7% respectively.
Scholz, however, maintained that the EU’s banking oversight remains “robust and stable.”
“For many years now, we have taken very correct decisions with regard to the stability of our banks in Europe,” the chancellor said.
Lagarde told a eurozone summit earlier that the bloc’s banking sector is strong, and that the ECB would provide liquidity to eurozone banks if necessary, the Financial Times (FT) cited an EU official as saying.
The FT went on to say that, although Deutsche Bank has managed to recover after “years of scandal and controversy,” its domestic retail lender is barely profitable, and its asset management unit was hit by the ‘greenwashing scandal’ – when it was revealed that the bank was lending large sums of money to industries that heavily contribute to global warming.
Source: Russia Today