KOENIGSTEIN Germany Jan 22 The chief executives
of Deutsche Bank and JP Morgan have both
rejected the idea of splitting off trading operations from
retail operations to make banks safer.
"You lose enormous economies of scale if you separate
investment banking," Deutsche Bank co-chief executive
Anshu Jain told a panel discussion on Monday.
"You solve a problem that does not exist and you create a
lot of new ones," he said in remarks embargoed for release on
JP Morgan CEO Jamie Dimon said a vital step toward bank
reform was not a legal split of investment banking from other
operations but a framework where banks can be allowed to fail
without contaminating the broader economy.
"We have to make sure that a bank fails without costing
billions of dollars," Dimon said, referring to taxpayer money.
In October, a European Union advisory group led by Bank of
Finland Governor Erkki Liikanen said banks should split off both
trading on their own behalf and "activities closely linked with
securities and derivatives".
The Liikanen group said ring-fencing trading desks would
make it easier for the part of the bank that holds savers'
deposits and lends to businesses to keep running even if other
bits of the business collapsed.
Jain said the Liikanen proposals could even lead to European
banks being disadvantaged. "My concern is that you create an
uneven playing field when you abandon universal banks in Europe
In September, Deutsche Bank announced a new strategy based
on closer integration between its investment bank, asset
management and wealth management unit.
Deutsche Bank shares dipped in early trading after the
Boersen-Zeitung newspaper reported German regulator BaFin had
ordered large banks to simulate a break-up. BaFin declined to
Deutsche Bank was down 1.6 percent at 1615 GMT, off earlier