Banks

Europe’s banks want help from the ECB

Last week, the European banking scene under powerful pressure, the courses broke away, warnings of a repeat of the great financial crisis emerged. Now call bankers the ECB for help.

The year 2008 seemed to in the past week once again begin to want – 2008, this was the year of the great financial crisis that the world to the brink of collapse brought. Then, there was the crisis of individual banks, los, and now once again it is the banks, the powerful under pressure.

First of all, the Deutsche Bank, Germany’s main banking house. Since the beginning of the year almost a third of their theshareholder value is lost. Other it’s not much better, especially shaken are Société Générale of France and Unicredit of Italy. The sector index shows the full extent of the mess: Since the beginning of January, the European Stoxx banking index up 22 percent, twice as much as the overall market.

Homemade problems at Deutsche Bank

Anonymous bankers warn

“It is time that the ECB would intervene”, as quoted the German “Handelsblatt” on Tuesday, the Board of a major European Bank, without his name to call. Another Spitzenbanker, also anonymous, quoted the sheet of paper with the words: “The banks alone, this crisis was not overcome.”

‘This crisis’ – this is an opaque brew with many ingredients. These include the fear of a global recession and the consequences of the rapid Ölpreisverfalls; for the banks is reflected in the reflected in the risk of major breakdowns for loans. But also tougher regulation of the banks with new liability rules and higher capital requirements puts a strain on the sector.

“Many investors realize only now that some banks are naked”, said recently, the economic historian Harold James of the U.S. University of Princeton. Still be the Capital of many banks especially in Europe is too low. Actually apply mostly Italian banks as being at risk, because in the country of about 200 billion euros in bad loans that have accumulated.

Italy is suffering from bad loans

No Exaggeration?

Also, the Bonn Economist Isabel Schnabel finds, “the events are very disturbing”. One could not be considered Hyperbole to dismiss. There are a number of factors, on the profits of the banks are expressed, ” she told the newspaper “The world”: “in the Short term, these are the weak global economy and credit risks from the oil business, in the medium term, especially the low interest rates, the business model of the banks in question.”

Bankvertreter drag as a result of this, you would have to come back more freedoms get: “The ECB would have the pace of regulation to reduce, to calm the markets”, cited the “Handelsblatt” a Bank Board. The political those responsible in Europe think but don’t remember. Rather strengthened, especially the stricter provisions of the trust in the sector after the financial crisis, said the chief of the Euro group, Jeroen Dijsselbloem, recently the Dutch radio.

Dijsselbloem has tangible motives to demands for a laxeren control of the financial sector to ward off. The rescue of the financial system after the great economic crisis of 2008 cost the European taxpayers at least 1.6 trillion euros. This should not repeat itself.

ECB: Stronger banks

Also, ECB chief Mario Draghi refers to the efforts of the last years to safeguard the financial system. Finally had “the banks in the Euro-Zone their equity capital in recent years significantly strengthened,” he said this week before members of the European Parliament. For fast help sound the not. The banks were now able to get their non-performing loans to reduce.

Banks, under pressure: The ECB is watching and waiting.

Also the Bonn-banks-Professor Thomas Hartmann-Wendels finds that banks are the only once even asked. The Deutsche Welle, he said, we must prevent, “that the mistakes the banks have made, ultimately, by the taxpayers again to be worn”. Of course, you should always make sure that the financial system as such does not collapse. “It’s always a certain risk, but I see at the Moment, not acutely. A support of the banks by the ECB can therefore only be a last resort.”

Risk premiums

However, the risk that banks could assume, huge. In the 19 countries of the Euro Zone, the bad loans currently in the sum of 1.2 trillion Euro appreciated. No wonder, that the risk premiums for securities in the amount of shooting that investors against the failure of Bank shares to hedge: The impact here is 60 percent.

ar/iw (agencies own)