Europe urgently needs a 150 billion-euro ($166 billion) bailout fund to recapitalize its beleaguered banks, particularly those in Italy, Deutsche Bank AG’s chief economist David Folkerts-Landau said in an interview with Welt am Sonntag.
Europe risks to face a new banking crisis. He suggests a huge EU bailout program. Private creditors should not participate.
The decline in bank stocks is only the symptom of a much larger problem, namely a fatal combination of low growth, high debt and a proximity to dangerous deflation.
The Bloomberg Europe 500 Banks and Financial Services Index has tumbled 33 percent this year, falling to the lowest level in more than seven years on Thursday. Deutsche Bank’s stock price has fallen 48 percent during that period.
"Europe is extremely sick and must start dealing with its problems extremely quickly, or else there may be an accident," Deutsche Bank’s David Folkerts-Landau said.