Deutsche CEO: Negative rates have 'fatal consequences'

The head of Germany's embattled Deutsche Bank believes negative interest rates are posing an imminent danger to the economy, savers and pension funds.

Deutsche CEO John Cryan warned of "fatal consequences" that could occur should the European Central Bank continue down the road of negative rates. The ECB is holding its deposit rate at -0.4 percent; government debt yields through large swaths of Europe are carrying negative rates as well.

"Monetary policy is thwarting goals to strengthen the economy and to make banks safer by now," Cryan told German newspaper Handelsblatt, according to an account in The Telegraph.

Some $11.4 trillion in global sovereign debt is carrying negative yields, according to Fitch Ratings. The number is slightly off its high of $11.5 trillion in mid-July but still carries potentially ominous consequences.

While intended to spur growth by directing money away from safe-haven investments, negative rates instead have spurred higher savings rates and economic unease among Europeans — essentially the opposite of their intended purpose. Japanese government debt up to 10 years in duration also carries negative yields.

Cryan said the ECB deserved praise for rescuing the economy during the financial crisis, but it has gone too far.

The negative-rate regime, he said, is "working against the goals of strengthening the economy and making the European banking system safer."

Deutsche, of course, has its own problems. Europe's second-largest bank is fighting a wave of negative headlines and is cutting more than 30,000 jobs over the next two years. The bank's U.S.-traded shares are down more than 50 percent over the past year.

The bank's representatives did not respond to a request for further comment.

The full post for Handesblatt can be found here (subscription required.)