President of the European Commission Jose Manuel Barroso (L) and Australian Prime Minister Julia Gillard hold a joint news conference at the Parliament House in Canberra Monday. – Reuters FRANKFURT — Europe's sovereign debt crisis will stunt bank profit for years and could kill off the weakest, Deutsche Bank chief executive Josef Ackermann told industry bosses, amid intense scrutiny of the sector's finances. “Prospects for the financial sector overall ... are rather limited,” the CEO of Germany's top bank said on Monday. “The outlook for the future growth of revenues is limited by both the current situation and structurally.” Ackermann was speaking at Frankfurt's annual Banks in Transition conference against a backdrop of gloom in the capital markets, where fears some euro zone countries could default on their debts have sent investors scurrying for shelter. Many European banks could go under if they had to accept a “haircut” at current market valuations on their entire sovereign debt holdings instead of the 21 percent writedown that has been proposed on Greek sovereign debt, Ackermann warned. “It's stating the obvious that many European banks would not survive having to revalue sovereign debt held on the banking book at market levels,” he said. Shares in the banks that hold much of that debt dropped, with the STOXX Europe 600 banking index falling nearly 5 percent to its lowest in 29 months. Fears about how the crisis will play out have halted the takeovers and stock market listings that are the lifeblood of the bloc's investment banks as slowing global economic growth put the prospect of recovery further into the future. “The chances of a near-term recovery remain slim as eurozone debt concerns, structural reform and a lawsuit for allegedly mis-selling mortgage debt all weigh heavy on the sector,” Manoj Ladwa, a senior trader at ETX Capital, said.
