Deutsche Bank CEO doubts Greece can repay debt: report

FRANKFURT Fri May 14, 2010 7:42am EDT

Josef Ackermann, chief executive of Germany's largest business bank Deutsche Bank AG, sits in the witness box in a courtroom of the western German city of Duesseldorf in this May 12, 2010 file photo. REUTERS/Wolfgang Rattay

Josef Ackermann, chief executive of Germany's largest business bank Deutsche Bank AG, sits in the witness box in a courtroom of the western German city of Duesseldorf in this May 12, 2010 file photo.

Credit: Reuters/Wolfgang Rattay

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FRANKFURT (Reuters) - Deutsche Bank (DBKGn.DE) Chief Executive Josef Ackermann cast doubt on Greece's ability to repay its debt in a TV interview and said a $1 trillion euro zone rescue package will help stabilize Italy and Spain, while the situation in Portugal is more difficult.

Ackermann, one of Europe's top bankers who has helped to put together a private-sector bailout package for Greece, questioned the country's ability to turn itself around, according to excerpts of a transcript for the Maybrit Illner talkshow set to be broadcast on German television ZDF on Thursday evening.

Greece has been forced to implement tough austerity measures as a precondition for an international bailout, a move that has sparked widespread protests in the southern European country.

"Whether Greece over this time period is really in a position, to bring up the strength <to make this effort>, I have my doubts," Ackermann said in the transcript, adding that this requires "unbelievable efforts".

If Greece were to "fall down" this could spread to other countries and lead to "a sort of meltdown," Ackermann told ZDF.

Greece is the first country in 11 years of European monetary union to require a political pledge of support as fears over its debt sparked a market attack that has dented the euro and required euro zone governments to team up for a bailout.

Thanks to a $1 trillion rescue package assembled to stabilize the euro, Ackermann believes Italy and Spain will be "strong enough, to service their debt," limiting the probability of so-called contagion but added that in the case of Portugal things are more "difficult."

Europe must intensify efforts to turn around Greece's financial situation to avoid a need to restructure its debt, since this would impact German banks, Ackermann told the show.

Deutsche Bank has said European banks could face losses of between 50 billion euros ($63.5 billion) and 75 billion if the debt crisis in Greece continues to escalate and banks are forced to take a "haircut" on Greek sovereign debt.

Despite the turbulence, the euro zone remains stronger than the United States or the UK, Ackermann told the show. Germany in particular with its strong dependence on exports, will profit from a weaker euro, Ackermann said.

Ackermann said the euro remained fundamentally strong, and said he did not see any danger of inflation within the euro zone "within the next two to three years."

Ackermann said it would not have been possible to reach the euro zone stabilization deal any sooner, but said a better dialogue was needed between financial experts and politicians.

Ackermann has played a key role in rallying Germany's financial sector, persuading them to contribute 8.1 billion euros over three years to add to a 110 billion euro bailout of Greece.

(Reporting by Edward Taylor; editing by Elaine Hardcastle)

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Comments (6)
cjjoy wrote:
I wish he continued with his predictions of the consequeences of Greece’s failing to service its debt .

May 14, 2010 8:09am EDT  --  Report as abuse
milonja wrote:
Conflict of interest between US and EU is obvious in these media reports and comments regarding euro and euroland debts.

May 14, 2010 8:33am EDT  --  Report as abuse
magdin wrote:
Edward, you bring the same name than me, but be careful with your editing pieces.Ackermann is a man of Angela Merkel, and Madame Angela already has declared the EUROZONE death. The german taxpayer don’t want more to pay for Greece stuff and problems. To be honest, the PROFESSOR, here inn DUBAI, of european origin know perfectly that GREECE HAVE NOT TO ENTER EUROZONE from the very beginning id est from around 2001.Don’t give a dime of what say a bankster. From Dubai with love. THE PROFESSOR

May 14, 2010 8:49am EDT  --  Report as abuse
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