... Deutsche's is a high-risk strategy. Though the chief executive, Josef Ackermann, has not categorically ruled out a state recapitalization, turning to public coffers could cost him his job, some analysts said. "For Deutsche, this would be such a U-turn that there would be a problem with credibility," said Simon Adamson, a banking analyst at CreditSights in London. For now, the bank is walking a fine line, trying to shrink its balance sheet by reducing lending while simultaneously assuring the German government and its best clients that the money spigot remains open for well-run businesses. <...> Mr. Krause said he had given each banking division targets for reducing lending. Mainly, he said, Deutsche will crank back lending for ventures that are now out of fashion, like leveraged buyouts. The issue is particularly delicate in Germany, where the Mittelstand, a collection of mostly family-owned companies that has proved highly resilient to the crisis, forms the backbone of employment. Jürgen Fitschen, the top Deutsche executive for Germany, said last week that Deutsche had raised the volume of its lending to the Mittelstand by 11 percent, to 40 billion euros in the last 12 months. Deleveraging "will not happen on the back" of the Mittelstand, Mr. Fitschen said. ...
"For Deutsche, this would be such a U-turn that there would be a problem with credibility," said Simon Adamson, a banking analyst at CreditSights in London.
For now, the bank is walking a fine line, trying to shrink its balance sheet by reducing lending while simultaneously assuring the German government and its best clients that the money spigot remains open for well-run businesses. <...>
Mr. Krause said he had given each banking division targets for reducing lending. Mainly, he said, Deutsche will crank back lending for ventures that are now out of fashion, like leveraged buyouts.
The issue is particularly delicate in Germany, where the Mittelstand, a collection of mostly family-owned companies that has proved highly resilient to the crisis, forms the backbone of employment.
Jürgen Fitschen, the top Deutsche executive for Germany, said last week that Deutsche had raised the volume of its lending to the Mittelstand by 11 percent, to 40 billion euros in the last 12 months. Deleveraging "will not happen on the back" of the Mittelstand, Mr. Fitschen said. ...
the Mittelstand
is nothing other than your small and medium-sized business segment. The key point here (aside from the fact that they really are the primary job engine) is not that they are family-owned businesses (many are, many aren't but that there are an awful lot of toolmakers and manufacturers of other industrial equipment (I know of one company that does nothing but wire cabinets for companies selling equipment to VW) who depend on credit for their working capital over the 12 to 18 mo. order cycle.
The conventional wisdom is that the banks and insurance companies do not want to appear to need bailout money (the Soffin fund). Naturally, executives claim that the fact that the terms set strict limits on compensation (no more than €500k, no bonuses, no golden parachutes) plays no role whatsoever. The fact is that what we're experiencing right now is a top-down disaster. -Paul Krugman
