Banks see small improvements amid volatile markets

By Lynne Olver

CALGARY, Alberta, Sept 5 (Reuters) - Financial markets are still volatile and fragile, with investors fretting over rumors of major bank losses or large portfolios getting dumped onto the market, Josef Ackermann, chief executive of Deutsche Bank (DBKGn.DE: Quote, Profile, Research), said on Friday.

But he and other bankers attending a business forum in Western Canada pointed to glimmers of improvement in some parts of the global business, which has been slammed by about $450 billion in credit-related writedowns.

Most types of loans are still available in Europe and in emerging markets, and rising credit default rates are more problematic in the United States than in Europe, Ackermann said during a forum on global banking at the Spruce Meadows equestrian center near Calgary.

But he pointed to the slowdown in the European economy, and said "the real problem is how long and how deep will this slowdown go."

As for financial products hard-hit by the credit crisis, buyers now appear to be emerging.

"Right now, it seems to be that distressed products are seeing some kind of stabilization," Ackermann said.

Gord Nixon, chief executive of Royal Bank of Canada (RY.TO: Quote, Profile, Research), said capital markets are functioning better today than they were a few months ago. But he also said the industry will have to face higher capital ratios and greater regulation.

Banks with broad geographic coverage and balanced portfolios emerged from the credit crisis with an advantage, Nixon and Ackermann said.