Bankers Cross Swords Over Bailouts

FRANKFURT (Reuters) - Germany's Bundesbank urged banks to use a markets recovery to restructure and prevent a rerun of the financial crisis even as Deutsche Bank's chief called for a common bailout fund with taxpayer backing.

"The responsibility for avoiding future financial crisis lies with the credit industry itself," said Bundesbank President Axel Weber, who also sits on the European Central Bank's policymaking Governing Council.

"Our contribution as regulators will be that we help to make sure that that is recognized and carried out."

Speaking at the same conference in Frankfurt, Deutsche Bank CEO Josef Ackermann defended the need for large global banks and backed the creation of an international bailout fund as a new tool to rescue stricken lenders.

Although large banks should be required to hold extra capital as a buffer to offset a downturn, Ackermann said taxpayer funds would likely be needed in future crises.

"We will probably in the end have to accept that the state, in the case of systemically relevant banking crises, will remain the shareholder of last resort," said Ackermann, who also chairs the International Institute of Finance bank lobby group.

Without making clear how such a fund would work, Ackermann called for public-sector contributions to such a bailout fund to head off the need for "midnight rescues."

But the idea met with resistance.

"We see any form of a common pot or spillover system as problematic," said Uwe Froehlich, president of the Association of German Cooperative Banks. German cooperative banks have so far avoided large-scale failures and have not tapped taxpayer funds.

Deciding who should pay for such a fund also remains a thorny issue in the 27-member European Union, which is home to over 40 large banks with cross-border operations.

The idea of levying a tax on financial transactions -- the so-called Tobin tax -- has met with widespread skepticism.