An intriguing article from the London Telegraph via The Age.
The message from bankers at the Association for Financial Markets in Europe (AFME) annual dinner in London this week was a concerning one. This was not because of the reference by the guest speaker, Jean-Claude Trichet, to just how close the world has come to a repeat of the Great Depression. Even the European Central Bank president would no doubt admit that’s still very much a real and present danger.
Rather, it was because there seemed to be scarcely a person in the room who thought the grand plan to recapitalise the European banking system would do the trick. Indeed, many took the same view as Josef Ackermann, chief executive of Deutsche Bank, that it’s likely to be outright counter-productive.
The overwhelming message was: We don’t need this new capital. And if regulators really are going to force us to mark sovereign debt to market and backstop capital to 9 per cent, then we’ll be doing it by shrinking the balance sheet, not by raising new equity at today’s penalty rates. Thanks very much, but no thanks.