On the day that Lehman Brothers, then the world’s fourth largest investment bank, filed for bankruptcy three years ago, Anshu Jain, the incoming co-chief executive of Germany’s biggest lender, Deutsche Bank, chose to make the first public speech after his promotion earlier this year.
“The authorities did a terrific job in averting the risks of the Great Recession turning into the Great Depression. Unfortunately, it came at a price.
Not just for Europe, but for Western economies in general. We wound up with private debt being transferred on to government balance sheets,” he said.
His remarks come a day after French President Nicolas Sarkozy and German Chancellor Angela Merkel reached out with assurances that a Greek default was not impending and that it would remain part of Europe’s monetary union.
While cautioning that “a very significant political bridge” needed to be crossed to build a consensus, Jain felt the markets were “very clearly shortening the timeframe which politicians have in order to resolve this European crisis, which in itself may be no bad thing.”
“The process which we have to go through to bridge it is a political process which requires 17 different countries, and parliaments in each of these countries, to reach an overall consensus,” he said.
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Last week, World Bank President Robert Zoellick, too, said European leaders had reached a “key decision point” in charting the future course of action to restore stability in the monetary union.
Jain, currently head of the corporate and investment bank at the lender, will take over as co-CEO, along with Jürgen Fitschen, in May next year after the incumbent chief, Josef Ackermann, steps down.
In his present position, Jain oversees 80 per cent of the bank’s total earnings.
Although there was the risk of an accident, Jain said “the stakes are very high and all folks that we are in touch with give us every sign that the enormity of the problem is well understood and a solution will be found.”
“The timing of that solution and the exact nature of that solution is awaited. (But) the commitment to the euro zone is absolute,” he added.
Asia’s ‘explosive’ potential
At the same time, Asia retains “absolutely explosive” potential for growth, despite the challenges that countries in the region face, Jain said.
“It’s not as if all is rosy. There are challenges around governance, both corporate governance as well as government governance in a number of countries. There are persistent questions about hard-landing, particularly in China. It’s not as if Asia is without its set of obstacles,” he said.
Nonetheless, Asia is likely to outstrip the rest of the world, in terms of growth. “We are calling for 7.2 per cent growth for Asia in 2012 and, more important, 60 per cent of total GDP growth coming from Asia,” Jain said.
The Asia-Pacific region contributed about 12 per cent of Deutsche Bank’s net revenues in 2010, compared to just four per cent in 1995.