FRANKFURT German banks and their chief supervisor, the European Central Bank, don't speak the same language -- in most cases literally.
Almost all German banks directly supervised by the ECB have chosen to communicate with the watchdog in German rather than English, the ECB's working language, according to information obtained by Reuters from the ECB and the lenders.
The refusal to speak English, the lingua franca of international finance, illustrates continued resistance from the euro zone's most economically powerful country to the ECB's project to establish itself as the bloc's main bank supervisor -- one of the pillars of Europe's response to the financial crisis that began in 2008.
"To a certain extent it has to do with the sense of importance of the German banking system," a German corporate lawyer who works with banks said. "They say, 'We're the biggest jurisdiction in the euro zone and the seat of the ECB - why can't the ECB communicate in German with us?'"
The ECB and its Italian president, Mario Draghi, have come under renewed criticism in Germany over the central bank's cheap-money policy.
German lenders, equally, resent instructions from Frankfurt and many hope that maintaining German as the language for communication will give them the upper hand in dealing with supervisors. "We outsource the risk of a wrong translation to the ECB," a German bank executive said.
Banks have the right to choose the language in which they communicate with the ECB. English, the language of international business, has been the natural choice for most of them across the euro zone.
In Germany, however, English has been selected by just as few as three, including Deutsche Bank, which operates in more than 70 countries and has a British chief executive, and the local subsidiary of Sweden's SEB.
By contrast, just 14 of the remaining 107 banks supervised by the ECB in other euro zone countries opted for their local language.
Part of the reason for picking German has to do with the domestic or even regional focus of many German banks, whose staff may not feel comfortable drafting highly sensitive documents in a foreign language.
"We communicate in German because we are a German bank," Hans-Joerg Vetter, chief executive of regional lender LBBW, said. "We make use of the legal opportunities we have."
But this is not the whole story because even some of the more internationally oriented firms have opted for their local language.
"You want it in German so that you understand all the nuances and so that you can challenge it in court in your language," said the German corporate lawyer, who asked for anonymity because of his sensitive bank dealings.
"Although, it's good to see the English original because there may be errors in the translation."
Their case for choosing German might even be strengthened if Britain decides to leave the European Union at a June referendum as this would erode the status of English in European politics.
German banks have been among the most vocal critics of the ECB since it took over supervision of the euro zone's largest lenders in late 2014, with the aim of creating a single watchdog for the currency bloc after a raft of bank collapses during the financial crisis.
One of them, state-backed Landeskreditbank Baden-Wuerttemberg, even tried to escape the ECB's supervision altogether. The case -- in German -- is still pending before the European Court of Justice.
Germany's own financial watchdog Bafin has also criticised the ECB for overburdening small German banks with requests for data and the central bank's project to launch a euro-zone wide loan database has caused a backlash in the country.
The banks' insistence on using German is also causing some trouble to the watchdogs themselves as at least some members of each ECB's supervisory team -- typically the coordinator -- are not from the same country as the bank they watch.
"It's a huge headache," one supervisor said. "I can't be constantly asking my colleagues and the translation service just takes too long sometime."
For this reason some banks allow staff-level communication with the supervisor to take place in English, for instance for the upcoming stress tests, but they still expect official documents to be in German.
An ECB spokeswoman said native speakers on supervisory teams can help colleagues who are not fluent, while the institution also uses internal and external translators, as well as interpreters for more formal proceedings.
(Additional reporting by Andreas Kroener; Editing by Mark Heinrich)
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