New bank rules will make European lenders uncompetitive in a global marketplace and render consolidation more likely, Deutsche Bank
As we consider bank levies, higher capital requirements and a transaction tax we seem to have forgotten that we are in a global marketplace, Ackermann told a banking conference.
The likelihood that competitors die off or merge with others is higher than ever.
European bank chiefs are struggling to reposition their businesses to survive the debt crisis as they are being forced to choose between writing new business and building capital to strengthen their balance sheets.
While global regulators are asking banks to hold a minimum of 7 percent capital from 2013, the European Banking Authority has insisted that European banks to a step further and bolster their core tier 1 capital ratio to 9 percent by mid-2012.
Their U.S. peers will escape with a lower ratio because European governments want to make sure that banks in their region can cope with another round of writedowns of European debt, as the institutes in Europe are by far the biggest creditors of euro governments.
Wolfgang Kirsch, Chief Executive of DZ Bank, said the new regulation would cost German banks 5 billion euros per year, particularly punitive at a time of slow economic growth.
It is a fact that banks are only able to raise funds with difficulty on the capital market, Kirsch told reporters on the margins of the conference. Therefore, many are choosing to improve the ratio of equity capital to risk-weighted assets by making fewer loans.
LEVEL PLAYING FIELD?
That need has fundamentally changed the business environment for lenders, Ackermann said.
Cross-border international business models will be even more difficult to implement, he told an audience of central bankers, politicians and chief executives at the conference.
The tighter the regulatory framework, the more likely the rules will be different from country to country, which would drastically raise the fixed costs of an international strategy.
Ackermann said European regulators need to keep in mind the cumulative impact of new bank rules and what this could mean for the competitiveness of the sector as a whole.
Amid efforts to make the financial sector safer, they are no longer thinking about what new rules could mean for Europe's ability to compete, he said.
Andreas Schmitz, head of Germany's BdB banking association, noted: You can't achieve a higher return on equity compared to say the Americans if you have an uneven playing field.
Banks are being forced to raise their capital levels in response to European efforts to contain the sovereign debt crisis that has engulfed Greece. They have agreed to voluntarily write down 50 percent of their Greek sovereign debt holdings as part of a private-sector contribution towards a bailout of Greece.
Kirsch, whose bank is one of Germany's biggest banking creditors to Greece, said lenders had reached the limit with the agreement for a 50 percent haircut on Greece.
One mustn't abuse the leeway over what is possible for banks' voluntary contribution, he said. There is no question of doing the same for Italy and that is not being discussed, he added.
(Writing by Sophie Walker; Editing by Mike Nesbit)