Deutsche Bank warns of ‘fatal consequences’ from ECB’s policies

FRANKFURT: The head of Germany’s biggest bank, Deutsche Bank,warned of the impact on savers and retirees of the European Central Bank’s ultra-loose monetary policy.

The Frankfurt-based bank’s chief John Cryan wrote in a guest commentary in Germany’s business daily Handelsblatt of the “fatal consequences” for savers and those in retirement of the ECB’s current monetary stance.

This included the ECB’s moves to cut interest rates to historic lows and to launch a monthly 80 billion euro ($90 billion) bond-buying programme as part of its efforts to fire up the 19-member eurozone economy and head off the risks of deflation.

Cryan’s comments follow the publication last week of the protocol from the ECB’s governing council’s policy-setting meeting in July,which raised the prospects of the bank delivering another round of monetary action when it meets on September 8.

“More time was needed to assess the incoming information over the coming months, although downside risks had clearly increased,” the ECB minutes said.

The minutes echoed comments made by ECB chief Mario Draghi at a press conference after the bank’s July meeting when he said the ECB stood ready to act in the event of any economic fallout from Britain’s referendum on June 23 to exit the European Union.

In particular, Germany’s finance industry has been critical of the ECB’s decisions to cut its benchmark refinancing rate to zero and to lower its deposit rate into negative territory, saying the moves have it those dependent on savings as a source of income. A negative deposit rate is aimed at encouraging banks to lend money so as to boost the economy, but it also represents a charge on the banks for holding cash.

As a result, some banks in Germany have begun passing on the charge to their customers. “The days of free personal bank accounts are over,” declared the President of the German Savings Bank Association (DSGV), GeorgFahrensch on in March.

Cryan also expressed doubts about the impact that the measures launched by the ECB were having on boosting the sluggish eurozone economy.

“Companies are holding back due to the ongoing uncertainty with investments and are rarely requesting loans,” Cryan wrote in Handelsblatt.

Still, the Deutsche Bank chief said there had been a positive side to the unprecedented flood of easy money that the ECB had unleashed on the eurozone economy.