Deutsche Bank joins industry criticism of ECB


FRANKFURT, Nov 9 (Reuters) – Deutsche Bank (DBKGn.DE) on Wednesday added its voice to the financial industry’s recent criticism of the European Central Bank, with the German lender’s chief financial officer saying authorities should do more to defend the banks.

The ECB and other institutions “should be working to defend the banks to help the economy rather than not depriving themselves of it”, chief financial officer James von Moltke told a financial conference organized by the Swiss UBS.

In recent days, the media have reported tensions between the ECB and some of the banks it oversees as a regulator in Europe, including differences over UniCredit’s capital allocation plans and its presence in Russia.

Deutsche Bank, one of the world’s most important to the global financial system, has for years been under the watchful eye of its regulators following multibillion-dollar fines for its role in the US mortgage crisis and money laundering failures.

Those costs, plus others to put in place internal controls at the behest of regulators and set aside money for rainy days, came as the bank restructured to restore profitability.

Chief Financial Officer von Moltke was asked during the conference call, streamed from Deutsche’s own website, about the lender’s blame at the ECB.

He initially said he would not comment, but then addressed a number of critical points.

Deutsche’s chief financial officer said the ECB was “overdue” in raising interest rates.

He also said “we are very critical” of a decision to change the terms of a loan scheme, known in banking lingo as TLTRO, which acted as a subsidy for banks.

The ECB justified its interest rate and lending policies as appropriate to bring inflation, now in double digits, back to its 2% target.

Von Moltke also clarified that Deutsche Bank disagreed with the central bank on its own leveraged lending activities, which the CFO said was “a key part of what we do.”

ECB banking supervisors have told banks to reduce leveraged funding when credit is extended to already indebted borrowers.

The CFO also needs regulators to provide banks with a stable capital environment to plan and provide credit to the economy.

“Our financial environment has been anything but stable over the past few years,” he said.

“Very often we get lost in rules and models and limitations and risk assessments, and we don’t let the banking industry do what it should be doing…be an engine of the economy,” he said. he declared.

Reporting by Tom Sims; additional reporting by Francesco Canepa; Editing by Miranda Murray and Elaine Hardcastle

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