Berlin slams Commerzbank CEO for urging euro zone bonds
BERLIN (Reuters) - The head of Germany's second-largest lender Commerzbank was sharply criticised by the government on Wednesday for suggesting Europe revive the idea of common euro zone bonds, with one official in Berlin urging him to stick to banking.
Martin Blessing, chief executive of the bank in which the government holds a 17 percent stake, wrote in an opinion piece in German daily Handelsblatt that euro zone bonds would "permanently establish the euro as a globally important currency" and ensure European competitiveness.
Chancellor Angela Merkel repeatedly rejected calls by European partners like France and Italy to introduce such bonds during the height of the euro zone's financial crisis, arguing that they would remove incentives for member states to reform and clean up their finances.
Steffen Kampeter, deputy finance minister and a member of Merkel's Christian Democrats (CDU), swiftly shot down Blessing's idea on Wednesday, saying euro bonds were "totally off the political agenda".
"Instead of occupying himself with an untimely subject like this, Mr. Blessing should concentrate on his role as chief executive," Kampeter said.
Speaking at a banking conference in Frankfurt, the co-chief executive of Deutsche Bank Anshu Jain also rejected the idea, saying he preferred the "discipline" of individual states issuing debt.
Blessing wrote in his guest column that the European Central Bank's (ECB) response to the euro zone debt crisis, and bonds issued by the European Stability Mechanism (ESM) bailout scheme, meant common liability was "already a reality" and that "euro bonds have already been introduced virtually by the back door".
As well as being attractive for investors, Blessing said, a legally-binding framework for such instruments would have the advantage of giving member states "strong incentives for fiscal discipline".
Kampeter said that, on the contrary, sharing liability in the euro zone would exacerbate problems by "reducing member states' incentives to carry out important structural reforms".
Commerzbank was one of the highest-profile casualties of the global financial crisis. The government spent about 18 billion euros bailing out out the bank.
(Reporting by Stephen Brown and Matthias Sobolewski in Berlin and Thomas Atkins in Frankfurt; Editing by Noah Barkin)
