FRANKFURT: The CEOs of Germany's two largest listed banks on Wednesday warned that a further cut in interest rates by the European Central Bank would risk serious side effects while having only minimal effect on the economy.

The stern message comes a week before an ECB policy meeting at which decision makers are leaning towards a stimulus package that includes a rate cut.

Deutsche Bank CEO Christian Sewing, speaking at a banking conference, said his bank's customers say they would not invest more if credit were 0.10 percentage points cheaper.

A rate cut would “only drive up asset prices and further burden savers", he said.

Lower rates would help those who are indebted or invested in assets, but the majority of the population would not benefit, he said.

“That divides society further," he said.

Commerzbank CEO Martin Zielke backed Sewing's stance.

“I also don't consider this a sustainable, responsible policy," Zielke said.

Banks in Germany and across Europe have long complained about ECB policy which requires banks to pay to park their cash at the central bank, hurting their profits.

Banks in Germany paid 2.4 billion euros to the central bank to hold cash in 2018, the German government said in response to a parliamentary inquiry on negative interest rates.

Copyright Reuters, 2019