Merkel's Finance Chief Says Deutsche Bank Must Stay Global
(Bloomberg) -- Turmoil at Deutsche Bank reinforces the need for Germany to have international financial players, Finance Minister Olaf Scholz said, breaking the government’s silence on a week of unprecedented corporate upheaval.
“We have to understand that we need global, functioning banks in Germany that can stay competitive and project strength,” Scholz told reporters alongside Chancellor Angela Merkel after a cabinet meeting on Wednesday.
The government is urging Deutsche Bank to stay engaged in powering Germany’s export strength after new Chief Executive Officer Christian Sewing signaled “adjustments” in its investment banking business. That coincides with an expected change in leadership at Volkswagen AG, the world’s biggest carmaker and another icon of German industry.
Merkel’s latest government, in office since March, has a stake in the corporate changes as she seeks to overcome the domestic political fallout of VW’s cheating on diesel emissions and global threats to Germany’s economic model, including President Donald Trump’s attacks on free trade.
“The issue of competitiveness is increasingly political,” Joachim Pfeiffer, a Merkel-allied lawmaker who heads her party bloc’s working group on economic issues, said in an interview. “Deutsche Bank and Volkswagen are wake-up calls to politicians that more needs to be done on trade, regulation and infrastructure.”
Deutsche Bank and Volkswagen both moved to replace their chief executive officers this week. The Frankfurt-based lender has struggled to adapt the company’s global investment banking business while Volkswagen is key to government efforts for diesel cars to meet pollution standards, avoid driving bans and contain the costs of recalls.
“We need an auto industry that’s in a position to help shape technological change, so that it remains a lead industry of this country,” said Scholz, who’s also deputy chancellor. “We’re keeping a close eye on it because these are important companies for the future of our country.”
Even so, Merkel has mostly kept “a big distance between politics and business” and her government “is still far away from taking a more activist approach,” Carsten Brzeski, chief economist at ING-Diba in Frankfurt, said by email.
While Sewing said he wants Deutsche Bank to remain a leading European investment bank and maintain a U.S. presence, he suggested it may become more selective. German officials have said privately the government would welcome such a shift.
“There will certainly be adjustments and we have to look at investment banking again,” Sewing said in a German television interview on Monday. “I can imagine that we will make more adjustments in investment banking, maybe also in certain regions.”
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