Bank sector may see more writedowns: Deutsche CEO
LONDON (Reuters) - Deutsche Bank Chief Executive Josef Ackermann warned on Monday that the pain may not be over for the global banking sector, with more write-downs possible if the liquidity and credit crisis continues to hit valuations.
Major U.S. and European banks have written down more than $60 billion due to a meltdown in credit markets, and two German banks -- IKB Deutsche Industriebank AG (IKBG.DE) and SachsenLB -- nearly collapsed under the strain of the turbulence.
"The fact is we have seen the collapse of prices at the end of every week," Ackermann told students at the London School of Economics. "Is that the end of the story? I don't think so."
He said that without a major bailing out of lenders some prices could drop further "and then further write-downs may be necessary," he added.
Ackermann did not comment on the specific situation at Deutsche Bank (DBKGn.DE), which took a 2.2 billion euro ($3.3 billion) write-down in the third quarter. He said in November that he did not predict further markdowns for the bank.
Asked on the sidelines about the bank's closely watched 2008 profit targets, including an 8.4 billion euro pretax profit goal, Ackermann did not answer. But the bank confirmed separately that it stood by its goals.
Addressing students on the lessons of the credit crisis late Monday, Ackermann warned that market turbulence could spill over into the broader economy, with an impact "somewhat more pronounced than people had anticipated," particularly in the United States and developed markets.
"In consumer lending, we already see the beginning of rising default rates, and that will have an impact on the retail banking side," he said.
On several occasions since the start of the credit market turbulence last summer, Ackermann has called for more transparency in the banking sector.
In Monday's speech he also questioned the banking industry's long-held "bigger is better" mantra, saying the recent crisis could prompt some of the industry's heavyweights and "universal" banks -- whose activities stretch from personal banking to structured credit products -- to refocus.
"The (idea) that the bigger your market capitalization, the better you are clearly has not been proved right," he said. "You will see a more and more focused approach and (it will become) more important for universal banking types to show they are integrated."
Innovation, he added, was not just for large players.
($1=.6726 Euro)
(Reporting by Clara Ferreira Marques; Editing by Jeffrey Benkoe)
