German economic minister attacks Deutsche Bank boss

Germany's Social Democrat leader Sigmar Gabriel has accused Deutsche Bank of hypocrisy over its growing financial difficulties, as the centre-left leader brings himself into position as a rival to chancellor Angela Merkel.

Last week shares plunged in Germany’s largest bank amid growing investor concerns about its long-term financial stability, in particular its ability to shoulder a multi-billion fine from US authorities for financial mis-selling.

In a letter to the bank’s 100,000 employees on Friday, chief executive John Cryan blamed speculators for the stock crash and vowed to restore trust in the company to ensure “this distorted perception doesn’t influence more strongly our daily business”.

Business model

On Monday Mr Gabriel, economic minister in Angela Merkel’s cabinet, mocked Mr Cryan’s version of the Deutsche drama.

“I don’t know whether to laugh or rage that a company that’s made a business model out of speculation has declared itself a victim of speculators,” he said.

A year before Germany's federal elections, Mr Gabriel is reportedly mulling a Merkel-beating centre-left alliance with the Greens and Left Party. He appeared to reject the idea of a state bailout for Deutsche Bank, and attacked the bank's executives for bringing the bank to the brink.

“The scenario is that thousands of people will lose their jobs,” he said. “They are paying the price for the madness that was pursued by irresponsible managers.”

Even as shares in Deutsche fell below €10 last week, down from over €100 before the financial crisis of a decade ago, a clear majority of Germans say they were not in favour of the state rescuing the institution.

Bailout

More than two-thirds (69 per cent) oppose such a move while just 24 per cent are in favour of a bailout, according to a representative poll by the Emnid agency for Focus magazine.

A report in that magazine last week – that Dr Merkel had rebuffed a request for state aid – triggered Deutsche’s plunge on stock market.

Widespread concern among blue-chip German companies saw a who’s who of chief executives come out over the weekend to declare their confidence in Deutsche Bank.

But that confidence in Deutsche is not shared by the wider German public. Germany’s largest bank has never enjoyed the kind of emotional attachment to its customers like other big companies, in particular the auto giants.

In a sign of the growing crisis, Deutsche Bank’s entire board will this week join Mr Cryan in Washington in a bid to resolve the stand-off with the US justice ministry over mis-selling of financial products between 2005 and 2007.