(Updates with Schaeuble comments starting in third paragraph.)
Dec. 5 (Bloomberg) -- German Finance Minister Wolfgang Schaeuble pushed back against Deutsche Bank AG co-Chief Executive Officer Juergen Fitschen after he said the minister’s call to keep up vigilance of banks was “irresponsible.”
Schaeuble, speaking to reporters in Berlin today, challenged comments made late yesterday by Fitschen in his capacity as president of the BDB private banking federation, saying that he was “wrong.”
“The experience of the financial crisis shows that the regulation of financial markets is urgently needed,” Schaeuble said. “The fact that we have to keep regulating is self-evident in view of highly innovative forces. That’s why I think if Mr. Fitschen looks over his statement carefully once again he will surely come to the conclusion that he’s factually wrong and that his tone of voice was inappropriate.”
The conflict between Germany’s biggest bank and Chancellor Angela Merkel’s point man on the markets broke out after Schaeuble said in a Handelsblatt newspaper interview published yesterday that “banks still show great creativity in evading regulation.” It became public as Schaeuble prepares to host talks in Berlin tomorrow on bank-failure rules with European Union financial-services chief Michel Barnier, according to two people familiar with the meeting who spoke on condition of anonymity because the talks are private.
Schaeuble should “keep a sense of proportion,” and “it’s irresponsible to comment in such a populist manner,” Fitschen said at a banking event in Berlin yesterday. “One can’t stand up and say the banks are still circumventing the rules.”
Fitschen spoke the same day the European Commission fined six companies a record 1.7 billion euros ($2.3 billion) for rigging benchmark interest rates between 2005 and 2010. While Deutsche Bank’s 725 million-euro penalty was the biggest, Fitschen said that “today’s headlines are almost exclusively about things that happened many years ago.”
“That doesn’t mean they’re any less worthy of criticism, but it isn’t OK to assume from that that things haven’t changed since 2008 or 2009,” he said.
Schaeuble reprised some of the comments he made to Handelsblatt, saying he recently told the Deutsche Bank co-head that the financial industry, not governments, caused Europe’s debt crisis.
“I don’t know exactly whether he understood what I actually said” in the interview, said Schaeuble. “It may be that governments are doing things in the area of regulation that aren’t liked by everybody. But the causes of the severe financial crisis --that mustn’t be forgotten five years later -- were not in government.”
Lawmakers from Merkel’s Christian Democratic Union and the Social Democratic Party that is now balloting members on whether they want to become her future coalition partner backed Schaeuble in the spat.
“Revelations of banks breaching the rules keep on coming,” Michael Meister, the CDU finance spokesman in parliament, said in e-mailed comments. “The banks would do well to show restraint and self-criticism.”
Klaus-Peter Flosbach, the parliamentary finance spokesman in parliament for the two-party bloc that backs Merkel, said it’s “incomprehensible” for Fitschen to reprimand Schaeuble just as his bank was fined. Merkel’s bloc “won’t allow any letup in regulation,” Flosbach said in e-mailed comments.
--With assistance from Nicholas Comfort in Frankfurt and Birgit Jennen in Berlin. Editors: Alan Crawford, James Hertling