Deutsche Bank CEO defends taxpayer bailouts -paper

FRANKFURT Nov 19 (Reuters) - Deutsche Bank (DBKGn.DE) chief executive Josef Ackermann told a German newspaper that taxpayers would have to come to the rescue of banks should a financial crisis engulf the entire sector.

"Many critics have the unrealistic assumption that a systemic banking crisis can be solved without deploying state resources," Ackermann told the Sueddeutsche Zeitung in an interview, parts of which were released ahead of publication on Friday.

Ackermann's remarks come as European Central Bank executive board member Juergen Stark this week said: "We must not add new incentives for moral hazard by creating an 'emergency fund' for banks, financed or cofinanced by taxpayers' money".

Ackermann said his bank's target of reaching a pretax return on equity of 25 percent would come under pressure with heightened capital requirements.

"When the preconditons change for all market participants, it's possible that the way you measure the best among them also changes," said Ackermann, chairman of the banking lobby International Institute of Finance.

Ackermann's comments come as regulators and politicians draw up new rules for capital requirements aimed at forcing banks to hold more assets to cushion against potential losses.

The Financial Stability Board, which coordinates policies for the Group of 20 industrial nations, was expected to present recommendations on capital requirements by October 2010.

In addition to requiring more capital, regulators are working on redefining which assets qualify as core capital.

The Basel Committee on Banking Supervision was due to come out in December with global proposals for a stricter definition of capital, a cap on leverage and minimum liquidity requirements.

The committee estimates that trading book capital will be 2-3 times higher under the new rules, a shift analysts have said would prompt a rethink by banks as to whether they want to continue trading certain complex or risky assets. (Editing by Dan Lalor)