Allianz CEO: vast COVID-19 cost will anger many ordinary people

© Reuters. Baete of Allianz SE attends the company’s annual news conference in Munich

By Guy Faulconbridge, Kate Holton and Paul Sandle

LONDON (Reuters) – Allianz (DE:) CEO Oliver Baete said on Tuesday that European governments needed to be careful about spending record amounts on the COVID-19 crisis as many ordinary people would be angry when they were handed such a vast bill.

The coronavirus pandemic has prompted a debt-fuelled spending splurge by governments across the world as lockdowns batter economies, shred millions of jobs and push whole sectors towards collapse.

The boss of Allianz, which has 2.3 trillion euros under management, said that there were a lot of “zombie” companies being kept afloat with government money though many private households were more resilient than some thought.

Many ordinary people, Baete said, were clearly smarter than the political classes who were spending record amounts of money – an issue that he said could one day hurt social cohesion.

“Our people are apparently much smarter than the political class and I say that with all due respect because … ‘somebody will have to pay the bill’,” Baete told The Wall Street Journal CEO Council.

“How does a society work where one part of the society keeps on spending beyond their own means and others are supposed to pay for that? Polarisation is a very important issue,” he said.

“So we need to be very careful. I don’t believe that this issue is just an economic question: it is actually a question of social cohesion.”

Baete said many financial markets looked irrational at the moment, partly due to excess liquidity and market structure. Allianz, he said, was keeping away from risk in its equity portfolios.

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Santander (MC:) chairwoman Ana Botín said that there were tough times ahead as the world entered in the second wave of the novel coronavirus crisis – and that there could even be a third wave.

“My worry is what happens from here on, my worry is that we’re going into a second wave, potentially even a third at some point, where things could get much tougher,” Botin, also speaking the Wall Street Journal event, said.

“And that is where we have to be very careful not to withdraw stimulus or support too early, at the same time I think it’s very important that we support companies that deserve to be alive and we’re not just giving the same to everybody,” she said.

She said medium-sized companies also needed support.


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