Blackrock Germany Europe Would Emerge as Loser in Spat With U.S.

Friedrich Merz, the chairman of Blackrock Germany, said the planned free trade deal between the E.U. and U.S. mustn't fail -- as Europe would lose out if it does.
Friedrich Merz, chairman of Blackrock Germany, speaking at the Handelsblatt Banking Summit.


Friedrich Merz, supervisory board of the German branch of U.S. fund management giant Blackrock, warned on Wednesday that Europe would end up as the loser if its allows relations with the United States to deteriorate.

“Ideally, I would wish for a new start in European-American relations once the U.S. election campaign is over,” Mr. Merz, the former head of the parliamentary group of Chancellor Angela Merkel’s conservatives, told the Handelsblatt Banking Summit.

He said the planned free trade deal with the U.S., the Transatlantic Trade and Investment Partnership (TTIP), must not be allowed to fail.

We would be the big losers of such a rift.

“We would be the big losers of such a rift,” he said, referring to remarks by Economics Minister Sigmar Gabriel of the center-left Social Democratic Party (SPD) who declared last Sunday that talks to reach the deal had “de facto failed.” The French government echoed his comments on Monday, casting serious doubt on whether TTIP will happen.

Mr. Merz, who is also president of  Atlantik Brücke (Atlantic Bridge), a non-profit organization to promote trans-Atlantic ties, fears that Europe and the United States will drift even further apart than they already have in recent years. He feels that with TTIP, Europe has an opportunity to shape global trade long-term, and that if it turns its back on a deal, the U.S. will align itself more with the Pacific region. “If you arrive at Los Angeles or San Francisco airport today, you would see how Asian America’s West Coast already is,” said Mr. Merz.

He also called on Germany to encourage greater equity ownership which is far less developed here than in the U.S. and other European nations – only 6.8 percent of Germans own shares directly. Including equity funds, the percentage is still low at 14 percent.

“We have to do something about capital formation by private households in Germany.”

He said he agreed with Christian Lindner, the chairman of the pro-business Free Democratic Party, who had said in a guest commentary published in Handelsblatt on Tuesday that Germany must become a nation of shareholders.

That would be a key step towards boosting retirement savings, said Mr. Merz, who was quick to add: “When I say that of course there’s also a business interest involved.”

Although Blackrock has investments in all Germany’s blue-chip DAX companies, Mr. Merz played down the idea of his company having too much power. He denied that “Deutschland AG,” or German Inc, the network of cross-shareholdings between banks, insurers and industrial companies in Germany that emerged in the course of the country’s post-war economic revival  – had actually become “Blackrock AG.” “If you see the name Blackrock on the lists of stockholders, then not because we own the stock, but because we are the trustees of many hundreds of thousands of stockholders,” he said.

Despite the Brexit vote, Mr. Merz said he still favored the planned merger of the London Stock Exchange with German stock market operator Deutsche Börse. “The merger must succeed now,” said Mr. Merz, who himself spent 10 years on the supervisory board of Deutsche Börse. He added that he “had not yet found anyone who thought it was a good idea for the holding company to be headquartered in London after the merger.” He said that Frankfurt now has the opportunity “to become a huge financial center in Europe.” He hoped that German politicians “share this view, and support it fully.”

Mr. Merz was coy on the subject of politics and a possible return to Berlin. “I get to Berlin now and then, and that’s quite enough. I enjoy being there but I also enjoy leaving,” he said.  And Mr. Merz also had a comment to share about German Finance Minister Wolfgang Schäuble (CDU). “We disagree on many points, but as a citizen of this country I am really pleased that we have a finance minister of his format.” That is important, and “that is why I am delighted every day he remains in that job.”