IMF Officials Play Down Risk of Deutsche Bank Crisis

Washington, – International Monetary Fund officials sought to play down the risk of an imminent crisis over Deutsche Bank and expressed confidence that German and European authorities were working to ensure stability.

Deutsche has been engulfed by a crisis of confidence since the US Department of Justice demanded up to $14-billion last month to settle claims that Deutsche missold US mortgage-backed securities before the financial crisis. The amount is viewed as a major drain on its capital.

The IMF’s markets and capital markets deputy director Peter Dattels said that Deutsche Bank was systemically important and needed to revise an outdated business model that has left it earning too little profit in an era of very low to negative interest rates. “Deutsche Bank is among banks that need to continue to adjust to convince investors that its business model is viable going forward and has addressed the issues of operational risk arising from litigation,” Dattels said.

He added: “We are confident that the German and European authorities are monitoring the situation and working to ensure the financial system remains resilient.” The IMF released a new global financial stability report warning that European banks need “urgent and comprehensive action” to address legacy non-performing loans and inefficient business models that will not allow them to earn enough profits to stay viable and support economic growth.

Source: Qatar News Agency