Deutsche bank chief executive Christian Sewing has deepened his criticism of European politicians and central bankers for strangling growth in the region and making it an increasingly unattractive place for international investment.
“Especially for Europe, the sky has darkened,” Mr Sewing said in a speech at the Sibos payments and technology conference in London on Wednesday. “During my meetings and sessions in Asia last week, America and China were the hot topics of conversation. Europe was much less of an issue. We simply aren’t that interesting any more for many investors and companies.”
The recent decision of Norway’s sovereign wealth fund to switch a significant proportion of its funds into US equities from Europe was “alarming,” and reinforced the need for leaders to “act fast and decisively” so the continent does not “lose its relevance”, he said.
This year, Mr Sewing has emerged as a leading critic of central bank policy and politicians’ failure to implement structural reforms in Europe. In July, he unveiled a radical restructuring that will see 18,000 jobs cut and relinquish its ambitions to be a global investment bank.
This means the lender is far more reliant on its home market of Europe — and especially Germany, which might slip into recession — to revive growth.
Recently, chief financial officer James von Moltke downgraded the bank’s 2022 revenue target by as much as €1bn from €25bn, blaming the worsening macro environment. Privately, executives admit making a return on tangible equity of 8 per cent may no longer achievable in that time frame.
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Mr Sewing also took aim at other European institutions. Specifically, he questioned the decision by Margrethe Vestager, EU competition commissioner, to block the merger between the German and French train manufacturers Siemens and Alstom earlier this year, a move they said was needed to compete with state-backed rivals from China.
“Is it really in Europe’s best interest to ban the merger between two leading train manufacturers?” he said. “Becoming more competitive includes encouraging our competition authorities to widen their perspective beyond the European market.”
In the wide-ranging speech, Mr Sewing also sharpened his criticism of the European Central Bank after Mario Draghi cut interest rates further into negative territory, a move that will further depress banks’ profits and punish savers in the region.
“What is really worrying is that the central banks have used their tools to a large extent already, so there are no conventional measures left to effectively cushion a real economic crisis,” he said.
Mr Sewing called for reforms and initiatives including installing more unified policies and regulations across the single EU market, lowering corporate taxes in step with other countries such as the US and UK, encouraging more big mergers and boosting technological investment.
