Italy Can Solve Its Banking Crisis, German Bank Rep. Tells Bloomberg TV

The Association of German Banks' Kemmer sees the ECB as more of a challenge to German banks than the Italian banking crisis.
By Michael Sheetz ,

NEW YORK (TheStreet) -- The Italian banking crisis is in limbo as European Union leadership weighs the costs of its involvement to Italian voters and shareholders.

Michael Kemmer, General Manager of the Association of German Banks, does not believe Italy's crisis is a systemic issue that could spread to other E.U. countries.

"It's an issue which is located in Italy and has to be solved in Italy and they have the measures to solve it," Kemmer said on Bloomberg TV's "Bloomberg Go" on Wednesday. "We have European regulations, which [are] made for such issues."

Italy will be able to solve its banking problem, Kemmer says. He does "not think that that the German banking system is influenced from the banking crisis in Italy."

UniCredit (UCG), the Milan, Italy-based global banking group, gives Kemmer "some hope," thanks to its new CEO and increasing share price.

Kemmer believes that the biggest consistent challenge for German banks is the European Central Bank. Ranking the ECB's policy on a one-to-10, low-to-high scale, Kemmer ranked ECB policy as "a five to six."

"We think the liquidity overflow from the ECB is something which cannot be sustainable, which cannot last years on years ... we are not very happy about ECB policy currently," Kemmer noted.

Additionally, Kemmer commented that he hopes the final result of the Brexit for the financial sector will be a move to Frankfurt.

"We have to wait and see how this is going on, but I expect really an improvement for Frankfurt and maybe that they get more work in places," Kemmer added.

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