Baku, October 7 AZERTAC
The International Monetary Fund did not bring up Deutsche Bank’s name when it warned in its financial stability report that cash-poor banks in Europe with outdated business models posed a threat to the financial system.
But at a news conference on Wednesday to discuss the study’s findings, fund officials charged with gauging financial stability risks worldwide showed no such reluctance.
According to The New York Times, Economists and regulators have argued that Deutsche Bank, given its size and culture of risk-taking, poses more of a risk to financial markets than its peers in Europe and the United States.
This year, the I.M.F. said in a report on the German financial sector that Deutsche Bank appeared to be the riskiest bank in terms of threats posed to global financial system — an insight that prompted a sharp fall in the bank’s stock.
What drove the share price down had less to do with Deutsche’s business model and everything to do with concerns about a huge fine that would stem from the bank’s role in the sale of risky mortgages before the financial crisis, Deutsche Bank officials have said. The United States Justice Department has proposed that the bank pay $14 billion to settle the case.
Responding to a question about the size of the proposed penalty, Matthew Jones, a member of the I.M.F.’s financial stability team, said it was not the fine that was the problem but the question of underlying profitability, compensation and capital levels at institutions like Deutsche Bank.
The goal of all regulators now is to “create a culture of responsible finance,” he said.