European banks face collapse under debts, warns Deutsche Bank chief Josef Ackermann

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Josef Ackermann, the chief executive of Deutsche Bank, Germany's biggest bank, has warned that "numerous" European lenders would collapse if they were forced to book their losses on stricken sovereign bonds.

Mr Ackermann said that the value of billions of euros of loans has plunged to a level that could overwhelm smaller banks.

He told a conference in Frankfurt: "Numerous European banks would not survive having to revalue sovereign debt held on the banking book at market levels."

Mr Ackermann said market conditions were as febrile as the height of the banking crisis. "We should resign ourselves to the fact that the 'new normality' is characterised by volatility and uncertainty," he said. "All this reminds one of the autumn of 2008." ...

Deutsche Bank [Germany's biggest bank] has already warned that it could miss its target of €6.4bn pre-tax profits this year without a quick and sustainable resolution of the European debt crisis.

Not just American banks facing a crisis but European banks as well. Quite an ominous situation developing here with reference to the banking sector in Europe to that of 2008. The article goes on to cite Lagrade’s call for capitalisation of the banks, but the the chief executive of Deutsche Bank disagrees with this approach arguing “’forced recapitalisation would give the signal that politicians do not themselves believe in the measures’ they have implemented to bolster fragile eurozone countries”. Which is likely true, confidence in politicians to accomplish anything is withering to nothing as it is, capitalisation will probably come as a last desperate measure to “avert contagion” and forestall a banking collapse.

How funny! Creating debtors is going to kill those who invented it