Bankers plot course as sovereign debt clouds loom

FRANKFURT: Top European bankers will gather in Frankfurt for a two-day conference on Monday to share insights on whether the latest sovereign debt crisis squall could yet turn into a financial market storm.

Predictions of dark clouds over the German city's annual Banks in Transition conference are a fitting backdrop for the gloom in the capital markets, where fears over sovereign defaults in euro area periphery countries have sent investors scurrying for shelter, halting the takeovers and stock market listings that are the lifeblood of the bloc's investment banks.

Deutsche Bank Chief Executive Josef Ackermann will set the tone on day one of the conference with a review of the macroeconomic and regulatory changes that many bankers say are crimping banks' ability to earn their way back to health.

Germany's largest lender and global investment banking player has already warned that reaching its goal of 6.4 billion euros ($9.1 billion) in pretax profit for this year was becoming more difficult and required a quick and sustained resolution of the European sovereign debt crisis.

The crisis has kept banks hostage to market concerns about their capital strength and access to funding, concerns that were stoked again this week when the International Monetary Fund said Europe's lenders needed urgent recapitalisation.

A European source told Reuters that the IMF saw a capital shortfall of 200 billion euros ($284 billion) among European lenders.

The chief executives of Commerzbank, Societe Generale and UniCredit will also set out their visions for the way forward in difficult terrain.

As the prospects recede for a near-term return of confidence, some major lenders, including Barclays, HSBC, Goldman Sachs, Credit Suisse and UBS, have begun to slash tens of thousands of high-paying financial sector jobs.

The chief executive of JP Morgan's investment bank, Jes Staley, will give the view from the other side of the Atlantic.

Copyright Reuters, 2010