Reuters: Regulatory News: Deutsche Bank CEO: Basel III rules can disrupt economy

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Deutsche Bank CEO: Basel III rules can disrupt economy Jun 28th 2012, 22:27 FRANKFURT, June 28 | Thu Jun 28, 2012 6:27pm EDT FRANKFURT, June 28 (Reuters) - Deutsche Bank co-chief executive Juergen Fitschen said Basel III capital rules needed to be implemented with caution or risk more disruptions to the economy such as Commerzbank's shock withdrawal from shipping finance. The combination of trying to solve the euro zone financial crisis and stricter rules to make banks safer will impact the real economy, he said. "We should act with some caution. Perhaps it is better to adjust the rules afterward than seek to push everything through in one go without understanding the cumulative impact," Fitschen told a conference in Frankfurt on Thursday. Commerzbank, Germany's second largest lender, earlier this week said it would pull out of shipping finance in response to the stricter bank safety rules. "There will be indirect consequences because (Basel III) will limit liquidity in some areas," said Fitschen, who took over at the helm of Germany's flagship lender alongside co-chief Ansu Jain earlier this month. Banks are being stung not just by new European and international capital rules, but also by investors' lack of willingness to put money into the euro zone, Fitschen said. "The biggest problem we have in the financial market is to restore a shortfall of dollar liquidity for non-U.S. banks. The level of distrust on the other side of the Atlantic is massive," Fitschen said, referring to U.S. investors spooked by the euro zone crisis. "We can see today that in all the industries which use the dollar as a reference currency, there is a problem. That's commodities trading, shipping and aircraft finance," he noted. Without access to dollar funding, more large European banks could pull back from these sectors, adversely impacting global trade. "Yesterday a well-known German bank said something significant, following in the footsteps of some French banks," Fitschen said, in what amounted to a veiled reference to crosstown rival Commerzbank's move. "I am sure that its not the last time we will see changes in business policy at banks. This is part of the response to the demands put upon them by Basel III," he said. The rule changes for the banking market could have long-term consequences for industry. "I am convinced that now is the time when parts of this sector will move to Asia," Fitschen said, adding they had the shipping infrastructure and solvent banks which makes it a natural place for the industry to expand. Link this Share this Digg this Email Reprints

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