U.S. Treasury Secretary Janet Yellen stated that Deutsche Bank AG Chief Executive Officer Christian Sewing has contacted her in an attempt to downplay the impact of an analyst report which suggested European investors might sell U.S. assets due to trade threats.
Speaking at the World Economic Forum in Davos, Yellen remarked, "The assertion that Europeans will sell U.S. assets came from an analyst at Deutsche Bank, and of course, fake news media, led by the Financial Times, sensationalized it. The CEO of Deutsche Bank called to say the bank does not endorse that analyst's view."
The report, authored by Deutsche Bank's Chief Foreign Exchange Strategist George Saravelos last Sunday, indicated that Europe holds approximately $8 trillion in U.S. bonds and stocks, making it the largest creditor to the United States and highlighting Washington's reliance on foreign capital to finance its persistent deficits.
"For much of last year, we argued that despite America's military and economic strength, it has a key weakness: its reliance on others to fund its bills through massive external deficits. Europe, on the other hand, is America's largest creditor," Saravelos wrote.
While Saravelos did not predict an imminent sell-off, he warned that escalating geopolitical tensions could prompt some European investors to reduce their dollar exposure, citing the prior example of a Danish pension fund repatriating funds.
The report stated, "In an environment where the geo-economic stability of the Western alliance is under existential threat, it is unclear why Europeans would still be willing to play this role... Given that dollar exposure across Europe remains high, developments over the past few days have the potential to further catalyze a dollar rebalancing."
Deutsche Bank declined to comment on any contact between Sewing and U.S. officials. The bank stated, "As a long-standing policy, the work of Deutsche Bank Research is independent." Deutsche Bank added that views expressed in individual research reports do not necessarily reflect the views of management.
This incident occurs as bank research concerning trade, regulation, and economic policy is becoming increasingly politically sensitive. In 2021, Deutsche Bank retracted a research report that was highly critical of German financial regulators and policymakers, which claimed the German banking sector was in a long-term recession. The bank later stated the views expressed in the report were not authorized by research department leadership and distanced itself from the report's tone and content.
U.S. politicians are also increasingly targeting bank economists. Last August, former U.S. President Donald Trump criticized Goldman Sachs CEO David Solomon after the bank's research warned that U.S. consumers would bear increasing tariff costs; Trump suggested he should replace the bank's economists or "just focus on being a DJ."
Trump himself was a long-time client of Deutsche Bank, which provided him with hundreds of millions of dollars in loans for his real estate deals and other business ventures in the years leading up to his first presidential term. Sewing is scheduled to speak in Davos on Thursday.
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