DB - Deutsche Bank chief says Europe bank consolidation needed to navigate risks

Deutsche Bank ( NYSE: DB ) CEO Christian Sewing warned of an upcoming German recession, the dangers of becoming too reliant on individual countries and regions such as China, and the dominance of U.S. banks. European banks can be part of the solution, he said i n the keynote speech at the Handelsblatt Bank Summit.

With soaring inflation caused by the Russia-Ukraine conflict, a tight labor market and disrupted global supply chains, it's too late to avoid a recession in Germany, he said. "Yet we believe that our economy is resilient enough to cope well with this recession — provided the central banks act quickly and decisively now," Sewing said. "Right now many people still have their savings to fall back on to pay the higher prices; many companies are still sufficiently financed."

However, the greater the strain caused by high inflation, "the higher the potential for social conflict," he said. The financial sector must play a role in helping protect clients against risks and being partners for them worldwide, he said. And it's important to have strong banks domestically. "In Germany, we must not allow ourselves to add a further dependency — access to finance — to our current dependencies on gas, raw materials and supply chains," Sewing said.

That means consolidation of the banking industry will be needed, not just in Germany, but across Europe, he said.

"Size counts in banking — and if we don't want to hand over the playing field to the Americans, Europe must create the right conditions for big banks. I can only repeat what I’ve said before: both the European banking union and the capital markets union are essential here," Sewing said.

In July, Deutsche Bank ( DB ) revised its 2022 cost guidance due to inflation, bank levies, and the Ukraine war

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