EL-ERIAN: Deutsche Bank is 'not a Lehman moment'
REUTERS/Shannon Stapleton
El-Erian on Thursday told Bloomberg TV that the German lender's current turmoil will not lead to "a sudden stop to the global economy," like the one that followed Lehman Brothers' 2008 failure.
For one thing, he said, the global banking system is stronger than it was in the years leading up to the financial crisis. And, unlike Lehman, Deutsche Bank "actually has liquidity," he added.
US authorities have fined Deutsche Bank for as much as $14 billion for alleged improprieties involving mortgage-backed securities - a fine almost as large as the firm's market value. That stoked rumors that Germany may need to bail the bank out - something authorities denied.
The firm's shares have suffered since news of the fine broke, but are currently in recovery mode following a report that the German government is pursuing talks with US authorities to help settle the fine quickly.
"It is a warning that European banks are still under pressure," El-Erian said on Thursday.
"It is a warning that if we're not careful, that is going to create an extra headwind to European growth. And it is a warning that Deutsche Bank needs a new business model."
Deutsche Bank on Thursday announced it would cut another 1,000 jobs in Germany, in addition to the 3,000 already announced in 2015.
Here's the Bloomberg TV interview:
- Gold rate today: Latest gold rates in Mumbai, Delhi, Kolkata, Bengaluru, Chennai and other Indian cities
- AI Express cancels 75 flights on Friday, expects normal ops by Sunday: Official
- Luxury homes soar to 21 per cent market share; Affordable housing declines to 20 per cent in 5 years
- India poised to become world's third largest consumer market by 2026 outpacing Germany, Japan
- IPL's impact player rule implemented as test case, can be revisited: Jay Shah
- Nothing Phone (2a) blue edition launched
- JNK India IPO allotment date
- JioCinema New Plans
- Realme Narzo 70 Launched
- Apple Let Loose event
- Elon Musk Apology
- RIL cash flows
- Charlie Munger
- Feedbank IPO allotment
- Tata IPO allotment
- Most generous retirement plans
- Broadcom lays off
- Cibil Score vs Cibil Report
- Birla and Bajaj in top Richest
- Nestle Sept 2023 report
- India Equity Market