Commerzbank: Single Banking Supervisor Should Oversee all European Banks

By Ulrike Dauer and Eyk Henning

FRANKFURT--Europe's planned single banking supervisory body should oversee all banks, not only the large ones that are considered systemically relevant, Commerzbank AG (CBK.XE) Chief Executive Martin Blessing said Wednesday.

"It is crucial that all banks are subject to uniform rules," Mr. Blessing told a banking conference, adding that regulatory arbitrage must be avoided and recent experience showed that savings banks can also be systemically relevant.

He also said the widely discussed separation of investment banking from the rest of a bank's operations wouldn't solve any problems. He said the collapsed Lehman Bros. was a fully fledged investment bank bank and Hypo Real Estate, which was put under full German government ownership after it required billions of euros, was a pure credit bank.

The discussion is limited to exhausting "symbolism but doesn't tackle the real issues," Mr. Blessing said.

Better regulation of the derivatives market and of non-bank financial institutions, or shadow banks, would do more toward solving the problems than discussions about separating out investment banks, Mr. Blessing said.

Overall, the banking sector expects lower profits, he said, echoing comments Tuesday by Deutsche Bank AG (CB) Co-Chief Executive Juergen Fitschen.

Commerzbank, in which the German government holds a 25% stake, is expected to announce further restructuring of its retail banking operations in November. The bank already has substantially reduced business and won't resume ship financing for some time, Mr. Blessing said. It is, however, "very happy" with its Polish unit, BRE Bank SA (BRE.WA), and will continue on the growth path and invest in Central and Eastern Europe, he said.

Write to Ulrike Dauer at [e-mail] and Eyk Henning at [e-mail]