GO
Loading...

Enter multiple symbols separated by commas

Deutsche Bank CEO warns over negative rates

Juergen Fitschen, the co-CEO of Deutsche Bank, has warned that negative deposit rates - which could be introduced by the European Central Bank (ECB) - would have "unintended consequences" that could lead to further problems.

ECB President Mario Draghi said on November 7 that the central bank was "technically ready" for negative deposit rates if the economic situation warranted them. The ECB shocked markets on the same day when it cut its main refinancing rate to a record-low 0.25 percent, although it kept the deposit rate at zero.

(Read more: Deutsche Bank profit slammed by legal charges)

Speaking to CNBC, Fitschen said: "Personally, I hope it's not going to come, because even psychologically it's not sending the right message."

Fitschen said that penalizing banks for not lending enough to local businesses would be the wrong decision. He said that these banks were not lending for commercialreasons, and that forcing them to lend would have consequences, "that will later be felt in a very painful manner so that's what I've been warning about."

(Read more: New probe casts shadow over Deutsche Bank revamp)

The main unresolved issue in the euro zone was the connection between sovereign borrowers and the fate of the banks, Fitschen said, adding this could pave the way to future financial instability.

"I did say that once you tackle this issue you are bound to come up with a response as to whether governments are going to borrow money," he said, "And as long as there's no clear process under way, it's hard to see how this nexus could be resolved, and that always invites some kind of reaction from market participants if they believe that the quality of sovereign lending is going to deteriorate."

(Read more: Deutsche Bank widens Libor probe after chatroom found: Source)

Contact Europe News

  • CNBC NEWSLETTERS

    Get the best of CNBC in your inbox

    Please choose a subscription

    Please enter a valid email address
    To learn more about how we use your information,
    please read our Privacy Policy.

Europe Video

  • Greece in 'biggest crisis' since joining EU

    Dora Bakoyannis of Greece's New Democracy party discusses the country's "biggest crisis" since joining the European Union. Bakoyannis is touted as a future leader of the center-right party.

  • Greece: 'We just don't know what will happen'

    Tom Caddick, head of global multi asset solutions at Santander Asset Management, discusses the mood on Greece at Fund Forum International in Monaco.

  • Could Fed be bigger for markets than Greece?

    Markets rocked on Monday after Greece instigated capital controls. However, Slim Feriani, CEO of MENA Capital, says an interest rate hike by the U.S. Federal Reserve could be bigger news than Greece for markets.