* Banks may raise fees if faced with negative rates -
Deutsche Bank co-CEO
* Cheap credit may lead to future crises - Commerzbank CEO
* Not all banks technically prepared to deal with negative
rates - executive
(Adds comments from bank executives)
By Thomas Atkins
FRANKFURT, Nov 22 Radical moves by the European
Central Bank to spur euro zone lending through low or even
negative interest rates would not be effective and may sow the
seeds of future crises, German banking leaders warned on Friday.
Deutsche Bank co-CEO Juergen Fitschen said banks
will make lending decisions based primarily on the
creditworthiness of the borrower, not due to pressure from the
central bank to lend.
ECB President Mario Draghi said after the central bank's
last policy-setting meeting on Nov. 7 that it was "technically
ready" for negative rates, if the economy warranted them.
Although Draghi has since downplayed the possibility that
negative deposit rates were imminent, European banks have
expressed concerns in public and in private that they could lead
to market stresses.
"You don't lend because the central bank wants you to put
your money there and is threatening to charge you for the money
you leave with them. That would be grotesque. We'd create
another crisis," Germany's top banker, Fitschen, said.
Martin Blessing, chief executive of No. 2 German bank
Commerzbank, warned that too much cheap credit could
lead to future crises.
The ECB cut its main refinancing rate to a record-low 0.25
percent on Nov. 7 and kept the deposit rate at zero.
"One of the reasons why we are sitting here in the financial
crisis was asset price inflation in the U.S. fuelled by too much
cheap liquidity," Blessing said.
"I don't know how too much cheap liquidity can solve a
problem that was created by too much cheap liquidity," he said.
"I just don't get it."
STATE OF PREPAREDNESS
Technically, many banks remain largely unprepared for the
possibility that the ECB may impose negative deposit rates,
other senior bankers said.
"A lot of banks are not currently able to calculate it
because the systems are not designed for it, said Hans-Dieter
Brenner, the head of Helaba, one of Germany's five state-backed
"The systems would have to be changed pretty comprehensively
and in the end, almost every part of the bank would be affected.
The costs for that would certainly run into the millions."
Standard banking technology platforms were not built to deal
with negative rates, said one banker at a top 10 bank in
Germany, who could not be named because he was not authorized to
speak to the press.
"If the ECB were to introduce negative deposit rates, we
would have to implement it with great effort; it's not possible
with the push of a button," he said.
Otherwise, negative rates would not necessarily weigh on
bank profits, Fitschen said.
If negative deposit rates make it difficult for banks to
earn money on the so-called net interest margin, the difference
in the rate at which banks borrow and lend, then they will seek
revenues by charging customers differently, Fitschen said.
"If you can't make money from the current account you have
to change the way you charge for the services. We move more into
commission-based services," he said.
(Reporting By Thomas Atkins, Arno Schuetze and Jonathan Gould;
Editing by Hugh Lawson)