The danger of a wage-price spiral should not be underestimated in Europe.

The CEO of Landesbank Baden-Württemberg (LBBW), Rainer Neske, referred on Wednesday evening in the International Club of Frankfurt Business Journalists (ICFW) to the willingness in all areas of the economy to pay higher prices.

In his opinion, this is reflected in the most recent collective bargaining agreements.

"It is accepted that you need significantly higher wage agreements because the prices, not only in energy but also in rent, have increased significantly in everyday life," he said.

Markus Frühauf

Editor in business.

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Neske sees a great danger that the circulation will get going.

If this is the case, it will be difficult to control it.

In Germany, the inflation rate rose to 4.1 percent in September.

In October, inflation accelerated to 4.5 percent, the highest level since August 1993. Neske does not assume that the inflation rate will shoot through the roof.

It could return to normal a little early next year.

But inflation will likely be much more severe than currently assumed.

If only a few months ago the experts had considered the rising prices mainly as a temporary phenomenon due to the Corona crisis in the previous year, the critical voices would have increased noticeably in the meantime.

However, the CEO of the largest German Landesbank is not preparing for rising interest rates in the euro area.

The interest rate environment will not change fundamentally in the foreseeable future.

"This is bad news for German savers," he said, referring to long-term negative interest rates, which are falling even further in real terms due to inflation.

On the other hand, it is very good news for finance ministers, he added.

Central banks must dampen development in good time

In view of the high savings potential of Germans, he sees an explosive mix in the interplay of extremely low interest rates and inflation. Neske believes that the central banks are challenged here. In his view, the American Federal Reserve is much further advanced than the European Central Bank (ECB) in perceiving the dangers of inflation. "We can only appeal that the central banks around the world, in this dilemma in which they are now, respond in good time to this development."

Before the ICFW, Neske confirmed his bank's interest in the real estate financier Berlin Hyp, which belongs to Landesbank Berlin Holding. This is controlled by the savings banks and essentially consists of the Berliner Sparkasse. The Sparkassen are considering a sale of Berlin Hyp, in which, in addition to LBBW, DekaBank and Landesbank Hessen-Thüringen (Helaba) are said to be interested. All three institutes are very active in commercial real estate finance. Berlin Hyp thinks Neske is very interesting. The review process in which LBBW is participating is currently ongoing.

With a view to the consolidation among the Landesbanken, Neske spoke of a very complex topic.

The first task for every bank is to prove its viability and growth ability to customers, employees and owners.

Neske currently prefers to combine forces.

LBBW has taken over interest, currency and raw material management from BayernLB and HSH Nordbank.

A corresponding cooperation with Helaba is currently being examined.