October 4, 2016, Tuesday
TEHRAN: German Economy Minister Sigmar Gabriel accused Deutsche Bank on Sunday of blaming speculators for last week’s plunge in its share price when the bank had itself made speculation its business.
“I did not know if I should laugh or cry that the bank that made speculation a business model is now saying it is a victim of speculators,” Gabriel told reporters on a plane to Iran, which he is visiting with a business delegation.
Deutsche, which is Germany’s largest bank and employs around 100,000 people, has been engulfed by a crisis of confidence after the US Department of Justice handed it a demand last month for it to pay up to US$14 billion to settle claims that it missold US mortgage-backed securities before the financial crisis.
The threat of such a large fine has pushed Deutsche shares to record lows and a deal at a much lower price is now urgently needed to reverse the shares sell-off and help to restore confidence in Germany’s largest lender.
Chief executive John Cryan on Friday tried to reassure staff of the bank’s financial strengths in a letter which warned them that “new rumours” were causing the share price to fall and that there were “forces” that wanted to weaken confidence in the bank.
Gabriel, who is also leader of the Social Democrats (SPD), the junior partner in Angela Merkel’s coalition government, said he was worried about those who were employed by the lender.
The problems of Deutsche Bank are awkward for Berlin, which has berated many euro zone peers for economic mismanagement and taken a hard line on other EU nations giving state aid to bail out their problem banks.
Last week the German finance ministry moved swiftly to dismiss a report that a government rescue plan was being prepared in case Deutsche Bank was unable to raise sufficient new capital to settle litigation which includes cases dating back to its expansion before the financial crisis.
With Germany facing elections next year, there is little political appetite for helping a group disliked by many Germans because of its investment bank’s pursuit of business abroad that resulted in incurring billions of euros of penalties for wrongdoing.
— Reuters
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