German government denies working on Deutsche Bank rescue plan – as it happened

Here are the quotes from Christine Lagarde’s comments on Deutsche Bank in her CNBC interview with Sara Eisen.

Eisen: There are renewed concerns about the health of Europe’s banking sector. Deutsche Bank is trading at a record low level. There’s real worry about whether it has enough capital. Have you spoken to Chancellor Merkel about Deutsche Bank and the needs of the German banking sector?

Lagarde: Well, we completed back in June, actually, a financial sector assessment of the German banking system. And it is a system that is critically important with some systemic players. Deutsche Bank is certainly one of them. So I think we all have a stake in making sure that this situation is addressed, that the right measures are taken, that we don’t fall into over dramatisation either. But I trust that these measures will be taken.

Eisen: Do you trust that the German government would step in if capital is necessary?

Lagarde: You know, this is something that they’re going to debate amongst themselves. I don’t see...

Eisen: Would you recommend it?

Lagarde: I don’t see that particular institution as - at a stage where state intervention is absolutely called for at the moment. And I would hope that the right measure are taken internally so that the whole financial sector in Germany is solid and that systemic players [are] strengthened. It has recovered a bit today, by the way.

Eisen: Yes, it has. But do you see it as a global systemic risk?

Lagarde: Deutsche Bank is a systemic player. Let’s face it. Because it has a lot of relationship with many other banks around the world. And it is an international player as well. So it’s important that it be consolidated and, you know, it has a solid base. Let’s also be realistic. But it needs measures.

Christine Lagarde, the managing director of the International Monetary Fund, has said she does not believe Deutsche Bank needs state aid at the moment, in comments to CNBC:

And here’s a suggestion of a unexpected rescuer for Deutsche Bank:

Bloomberg reports:

Yigit Bulut, a chief adviser to Turkish President Recep Tayyip Erdogan, said the country must consider using a new wealth fund or a group of state-owned banks to buy the Frankfurt-based company. Bulut made the proposal on Tuesday via his Twitter account, saying Germany’s largest lender should be made into a Turkish bank.

The stock of Europe’s biggest investment bank has slumped by more than 50 percent over the past year, falling to a record low on Tuesday, over concerns about its weakening financial position and penalties in the U.S. tied to mortgage-backed securities. Bulut’s comments come after Moody’s Investors Service on Sept. 23 cut Turkey to junk, citing slowing economic growth and deteriorating credit fundamentals.

“For months on TV programs, I’ve been calling on Turkey’s private and public capital: ‘Some very good companies in the EU are going to fall into trouble and we need to be ready to buy a controlling stake in them,’” Bulut wrote on Twitter. “Wouldn’t you be happy to make Germany’s biggest bank into Turkish Bank!!”

And back with Federal Reserve chair Janet Yellen:

Asked about whether the German government should rescue Deutsche Bank he said he does not comment on individual banks. But:

More from ECB president Mario Draghi who is speaking after his appearance at the German parliament.He paints a rosy picture of his session before the MPs:

(ZIRP is the zero interest rate policy instigated by central banks such as the ECB)

And one German response:

Although the congressional session is mostly focused on regulation, Yellen did comment on interest rates. She said there was no fixed timetable for raising rates, but most Fed members believed it was appropriate to move if the economy remained on track.

So December then?

US Federal Reserve chair Janet Yellen’s comments on supervision and regulation of financial institutions, being delivered to a congressional committee, can be read here.

She said the Fed had implemented standards designed to limit the financial stability risks posed by the largest banks, in the wake of the global financial crisis. But she said they must endure small and medium sized banks did not face undue regulatory burdens. And she adds:

Looking forward, we must continue to monitor for the emergence of new risks, since another key lesson from the crisis is that financial stability threats change over time.

She concludes:

Our post-crisis approach to regulation and supervision is both forward-looking and tailored to the level of risk that firms pose to financial stability and the broader economy. Standards for the largest, most complex banking organisations are now significantly more stringent than standards for small and medium-sized banks, which is appropriate given the impact that the failure or distress of those firms could have on the economy...We anticipate taking additional actions in the near term to further tailor our regulatory and supervisory framework.

Yet even as we finalize the major elements of post-crisis reform, our work is not complete. We must carefully monitor the impact of the regulatory changes we have made and remain vigilant regarding the potential emergence of new risks to financial stability. We must stand ready to adjust our regulatory approach where changes are warranted. The work we do to ensure the financial system remains strong and stable is designed to protect and support the real economy that sustains the businesses and jobs on which American households rely.

And Draghi concluded by repeating his calls for policy makers to implement structural reforms:

For long-term interest rates to rise in the future we therefore need more investment and structural reforms to lift growth and productivity. As Wolfgang Schäuble said in this house a couple of weeks ago [when he presented the budget for 2017]: we will only get out of this phase of low interest rates if we have more sustainable growth in Europe...

At the height of the crisis, all Member States and citizens showed an enormous commitment to keeping the euro area together when the critics were already talking about the euro’s demise. But we cannot stop here: we need to make sure not only that the euro survives, but that our Economic and Monetary Union thrives.

If we want to succeed, we will need to find common solutions for the problems that we all face...

If we want savers to benefit from higher interest rates in the future, we will need to create investment opportunities to put these savings to a productive use. This is about raising productivity and employment. This is about structural reforms that are a necessary complement to our monetary policy. And Member States have to do their part.