Prepare for another financial earthquake, says Josef Ackerman, CEO of Deutsche Bank AG.
Consumer and corporate borrowers are in deep trouble and an anticipated upturn in defaults and delinquencies in these areas will again shake up the global economy, Ackerman told Bloomberg News.
"This crisis has consisted of a series of earthquakes, with changing epicenters," Ackerman said.
"Bad loans are the next wave. Banks that have fared relatively well so far will also be affected by this," he said in his gloomy assessment.
Anticipating the rise in delinquencies, in the second quarter Deutsche Bank stashed away $1.4 billion earmarked for risky loans. The market didn't like that and sent the bank's shares downward by 10 percent.
No wonder. Morgan Stanley analysts said in a note they "...were struck by the 44 percent increase in problem loans (held by Deutsche) in this quarter."
And, "The crisis is not over," according to Ackerman.
"When one looks at the developments of global economic growth, then it can be expected that starting in the second half of this year we slowly move into the positive territory. But we're still moving on a low level," said Ackerman.
While some banks may not be doing well, some bankers are doing just fine.
Almost 5,000 bankers at U.S. banks that got government cash and suffered major losses, received bonuses of more $1 million last year, reported The Wall Street Journal.
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