Germany’s banks have fallen behind European competitors like UBS. Deutsche Bank CEO John Cryan launched a five-point plan to urge competitors in Europe to grab back market share.
Too many banks in Germany, state-controlled firms, and a finicky, price-sensitive German customer are hitting the country’s finance firms. Only half of what used to be four major German banks remain.
John Cryan, a British former UBS financial institutions banker who rose to finance chief of the Swiss firm in 2008 and was instrumental in the bank’s rescue, is now tasked with rescuing Germany’s largest lender.
Deutsche Bank is struggling with perilously low capital and a too-bulky and risky investment bank – similar problems facing Switzerland's Credit Suisse.
Call for Shock Therapy
Speaking in faultless German, Cryan outlined technology, growth, normalized monetary policy, more effective regulation, and a viable European financial market as the five pillars for Europe’s banks to recover.
«Understandably no one wants to hear the term ‹banking crisis› any more,» Cryan told an annual banking conference hosted on Frankfurt by German newspaper «Handelsblatt».
«The ongoing debate about banks will only disappear from the political agenda if we now jointly and consistently solve these problems, rather than keep on postponing them – or making them even worse.»
Jeopardized by U.S. Banks
Europe’s small- and medium-sized companies are having trouble finding banks here to finance their international ambitions, and are turning to U.S. rivals.
Cryan has been a vocal critic of negative interest rates in Europe, views he redoubled on Wednesday, arguing that central banks would fail in attempts to spur growth through record-low or negative interest rates.
While arguing that Germany simply has too many banks, Cryan downplayed a report from Germany’s «Manager Magazin» (in German) that Deutsche is in talks with smaller domestic rival Commerzbank over a tie-up.
«Working Flat-Out»
«We have a lot of work to do, and everybody is working flat-out at the moment,» Cryan said.
«I know there are some regulators here today too and I should impress upon them that we are not deviating from our very big plans,» Cryan said, adding that Deutsche Bank isn’t looking for partners in the German market.
No More Arrogance
Cryan, an understated long-time Warburg banker who has been critical of the work of his predecessors Juergen Fitschen, Anshu Jain, and Josef Ackermann, conceded that the national champion had been accused of arrogance in the past.
He spoke of restoring a certain pride in Deutsche Bank, which has been slimming down by disposing of assets such as retail Postbank. Last week, it sold an Argentinian subsidiary to Banco Comafi.
«Too Many Banks, Too Much Banking»
He spoke directly before Commerzbank boss Martin Zielke addressed the audience.
Zielke said he wouldn’t address the report, but later agreed that Germany is home to «too many banks and too much banking».
He didn't elaborate on the role of Commerzbank, which issued a profit warning earlier this month, in consolidation in Germany.
Calls for «Superbank»
Deutsche and Commerzbank are reportedly in talks over combining back-office functions together with Germany’s DWP, a cooperatively-organized body of savings and loans banks.
Deutsche's Cryan as well as Credit Suisse Urs Rohner (in German) called for banks to join up into a «transactions» firm to pool administrative work.
In Switzerland, the idea has taken hold after UBS CEO Sergio Ermotti floated the concept last month.
