Eurozone crisis will see some weak banks collapse if governments renege on part of their debts, Deutsche Bank chief Josef Ackermann (pictured below) has warned.
“It’s stating the obvious that many European banks would not survive having to revalue sovereign debt held on the banking book at market levels,” said the outgoing chief executive of Germany’s largest bank.
And the crisis will be worsened by floundering governments’ inability to prop up the troubled banks, he added.
“The situation for banks is more dramatic than it was in 2008,” he said in a panel discussion at a conference in Frankfurt. “In 2008, governments were still able to support their banks. Now this is simply no longer possible.”
In a recent round of bank results, Greece’s banks marked down their holdings of government bonds by billions of euros, pushing them into the red. But they still received criticism that they had not sufficiently discounted the assets.