UBS Chairman: Deutsche Bank Won't Derail Banking System
UBS (NYSE:UBS) and the International Monetary Fund have opposing views when it comes to embattled German lender Deutsche Bank (NYSE:DB) which is facing a possible $14 billion fine from the U.S. Department of Justice.
This week the IMF warned that the bank poses a risk to the global financial system, however UBS Chairman Axel Weber said that Deutsche Bank’s issues are not indicative as another Lehman Brothers moment.
“Regulators and banks have spent enormous amount of time for making the system safer, making each of the banks safer by raising massive amounts of capital. If you look at pre-crisis, you could run a global bank on one or two percent of core tier one capital. Now most of the banks are well above 10%,” he said during an interview on FOX Business Network's Mornings With Maria.
Worries over the bank’s stability have shaved more than 50% off the stock price over the past 12-months on reports the U.S. government is seeking a massive settlement tied to a mortgage securities investigation. German Chancellor Angela Merkel’s government also denied a report in a German newspaper that officials were considering a bailout.
While Weber, who served as the former president of German Bundesbank, said while some global banks have more exposure to investment banking and derivatives markets, as a whole, the system is more stable, and those individual exposures can hedge for risk.
“There is no unorderly developments in the markets, and I don’t really think there is a chance or a risk of seeing unorderly developments at this stage,” he said.
While Weber didn’t speculate about whether Deutsche Bank would eventually find itself in need of a bailout, he said its situation is similar to one UBS found itself in during the 2008 financial crisis.
“We rebuilt the bank, we basically reestablished our market leadership in Switzerland. We’re now at a totally different place at the bank. I think it’s very important that everyone does their homework and focuses on capital, liquidity, that you focus on resolution. And it’s each bank’s job to get in a better place relative to where we were. And I think all of us are doing that, including Deutsche,” he said.