The head of the euro zone finance ministers, Jeroen Dijsselbloem, has told CNBC that he will use the annual meetings of the International Monetary Fund (IMF) and the World Bank to discuss how U.S authorities impose fines on the European banking sector.
Dijsselbloem – who is in charge of the Eurogroup of informal meetings of the finance ministers of the euro zone – said that banks in the region have been trying hard to raise capital and tackle legacy issues, but are continuously being confronted by U.S. regulators.
“Here comes the American authorities that says ‘Oh, you collected new capital, we’ll take that out as a fine’,” he told CNBC on the sidelines of the event taking place in Washington D.C. this weekend.
“Don’t get me wrong. Deutsche (Bank) has been involved in all kinds of scandals. They need to take their sanctions, but they need to be fair and effective and the last thing we want is for fines to threaten financial stability of the European banking sector,” he said.
Dijsselbloem – not speaking specifically on DeutscheBank – said that the penalties take away a lot of the new capital that European banks have created, adding that he thought it was becoming a risk.
“I think really we should discuss it … I will bring it up here at the IMF meetings,” he said.
“There is a limit to what you should and could do in relation to financial stability and as soon as you come close to that you’re overstating things.”
The perception is that Deutsche Bank needs to raise cash after the U.S. Justice Department (DOJ) suggested it pay $14 billion to settle a number of investigations related to mortgage securities.
Deutsche Bank’s stock has slid over 46 percent so far this year and the cost of insuring exposure to its debt has risen sharply. It has come under pressure from aggressive short-selling, notably from some large hedge funds.