The fine proposed by the United States for Deutsche Bank is too big and undermines financial stability by pulling out capital from an institution that is trying to recapitalize and restructure, the chairman of euro zone finance ministers said.
Jeroen Dijsselbloem said on Friday that the bank, one of Europe’s largest, was not too big to fail, but dismissed any possibility that it would fail noting it had large liquidity buffers and a high solvency ratio.
“The whole concept of too big to fail is wrong, we need to make sure they don’t fail. This is about making sure that every bank has enough capital to be bailed in, in case there are losses to be carried. What the stress tests and supervisors tell us is that the bank is sufficiently capitalized,” he said.
The U.S. wants to fine Deutsche $14 billion for its role in the sub-prime mortgage crisis.
“Let’s hope it is an opening bid,” Dijsselbloem told Reuters in an interview. “These kinds of fines are completely oversized, they are damaging to financial stability.”