SOVEREIGN DEBT:GERMANY'S LEADING banker, Deutsche Bank president Josef Ackermann, has rejected so-called haircuts on euro zone sovereign debt, but said he was open to such a provision in the future.
His remarks came as German finance minister Wolfgang Schäuble said he expected a deal between Ireland and the EU-IMF by early next week.
Mr Ackermann said that any new euro zone crisis mechanism, to come on stream in June 2013, should include a “collective action clause” allowing bondholders and governments to find a common solution.
However any such measure should, he said, be “voluntary and market oriented”, citing past agreements on emerging market debt as an example.
Trying to force existing bondholders to accept a loss on their investment was “impossible”, he added.
Mr Ackermann took issue with reporting of the financial crisis, saying it was mostly an investor problem.
“We need to get away from the mentality that this is a banking problem,” he said, adding that his financial institution would “practically not be affected”.
A spokesman for Deutsche Bank has said the bank’s exposure in Ireland is €300 million. But analysts suggest the true figure, excluding hedging measures, is much higher.
Meanwhile, Mr Schäuble dismissed Bundesbank speculation that it would be possible, if necessary, to top up the existing €750 billion emergency fund.
Mr Schäuble said the fund, which operates until 2013, was sufficiently large to cover all possible demands from euro zone members.
“I have no time for this incredible amount of speculation,” he said on Bayern 2 radio. “The many vague remarks suddenly gain in importance, make the markets insecure and just create extra disquiet.”
But leading German experts backed the Bundesbank position yesterday. Dr Henning Vöpel of Hamburg’s Institute of International Economics, told the newspaper Bild that €1.25 trillion was needed.
Meanwhile, Klaus Zimmermann of the German Institute for Economic Research said he envisaged the guarantee fund’s value being doubled to €1.5 trillion.
However, such a measure could only be temporary. “To safeguard the euro and get a handle on the debt crisis, the banks and the insurance companies have to finally share in the costs,” he added.
Yesterday Germany’s upper house, the Bundesrat, passed new legislation imposing a levy on banks to cover future bailouts.
The charge, estimated to raise €1 billion annually, will feed into a €70 billion fund.
Lawmakers rejected last-minute lobbying for exemption from savings banks and co-operative lenders who maintain they are adequately protected against risk.