the
- The credit rating of German banks could soon be downgraded.
- fundamental with low interest rates, structural problems.
- the Corona-and the threat of loan defaults, this crisis is being intensified.
The world map for the stability of the banks, the analysts of the international rating Agency Fitch draw, so: There are below a few white spots, this is Africa. The Rest of the planet is colored in red, Europe, bright red. Germany and a few other countries even have a dark red color.
The hue indicates whether the analysts are expecting soon, so that you need to levels, the credit rating of the banks down. In Germany and many countries in Western Europe, it looks that way. www.fitchratings.com/banks/global-bank-rating-trends
German banks get into the terminal
The analysis, which prepares the third-largest rating Agency in the world, is relentlessly: The pressures on the German banks is on the increase, because of a wave of problems breaks down on you in: Since interest rates, which remain due to the Corona-crisis longer than originally expected to be extremely low and the core business of banks, touch be.
“shall mean The above-average dependence of German banks from interest income compared to foreign competitors, and that this will increase the pressure to improve cost efficiency,” write the analysts, quite sober. At the same time, however, the public expectation to avoid redundancies during the crisis waxes. Thus, the German banks get into the terminal because you need to move the necessary job cuts as well as urgent investments.
in addition to structural also acute problems: loans not covered from the
enough, so the experts of Fitch. To lasting the long-lasting structural problems, very acute problems, which arise due to credit losses and a massive rise in insolvencies to come now, as soon as the currently suspended for Insolvency requirement takes effect again.
“the quality of The assets was” exposed to a “downward pressure,” writes Fitch. The solid capital base of German banks to be able to keep a moderate pressure. Their capital to a rapid deterioration in exposed to be quotas, however. “This is due to the fact that the modest gains of the sector to represent before the crisis, only a thin first line of defense, and the crisis-related deterioration in the quality of the assets” of the balance sheets more encumbered.
The same vulnerability also identifies the consultant by Accenture in a recent study: do you anticipate that European banks must write off loans in the amount of up to 415 billion euros. The potential losses are twice as high as in the financial crisis, more than eleven years ago, when many countries had to rescue their banks. In the U.S., the Trend was to be observed also, Where banks have been classified in the first half of the year, loans with a total sum of 60 billion dollars as a “non-performing”. Almost every tenth home financing had been exposed to. In the UK it was even every sixth financing of apartments and houses, which will not operate until further notice.
provisioning of Commerzbank
what have notified to the banks so far, in stark terms about the impact of the crisis officially, the international analysts are right: The partially nationalised Commerzbank has quadrupled the risk provisioning for possible loan losses of 78 million euros in the previous year to 326 million euros. In the case of the Deutsche Bank, the result of the second quarter of 2020 was below the expectations, because a significant increase in the risk provisions weighed on the profit.
In the case of the savings banks, the risk of pension increases to be moderate, but the Association’s President, Helmut Schleweis admitted in the spring: “We must expect that this trend will worsen through the Corona pandemic significantly.” More specifically, the President of the baden-württemberg savings banks Peter Schneider: “The risk provisions for possible loan losses will rise markedly this year, and in 2021, we expect a difficult year for many savings Bank customers recently,” he said. The German Volks – and Raiffeisen banks, which came to a balance sheet total of around € 1 trillion, to be expected in the light of the corona of a crisis is also more risk provisions.
The specter of default of loans not only in Germany, what are the looming banking crisis intensified, however, with the addition of: Lloyds Banking Group admits that they quadrupled, with up to 5.5 billion pounds in the risk provisions. The latest quarterly figures from Europe’s largest Bank, HSBC , to give an impression of what advancing on the branch: HSBC reported a net income drop of 96 percent to 192 million dollars. The reason: risk provisioning for non-performing loans. 13 billion dollars wants to return the Bank to do it.
savings banks under the magnifying glass
taken Back to Germany: the international analysts of Fitch have taken in the past week, particularly the savings banks under the magnifying glass. Overall, your judgment is solid. However, there are weak points: “We consider the cohesion of the savings Bank group of associations in comparison to other European Financial as weaker.” The complexity of decision-making processes within the group could affect their ability to react in case of an emergency. Larger credit losses, weak sales could lead in the worst case, to a “capital erosion”, the sun above all expectations.
the bottom line is the international observers of the German banking scene agree: The high fragmentation of the industry, intense competition, and the vulnerable business models “have prevented the German banks hard to achieve even after years of a strong economic environment in the country, adequate profitability,” writes Fitch. The consequence of this is etched on the map of the world: Germany’s banks see dark red.
Update: Corona-follow-quarter profit of Commerzbank
tarnish million in losses in connection with the insolvency of payment service provider Wirecard have diminished, according to the “Financial Times”, the quarterly earnings of the Commerzbank. Germany’s second-largest Bank, returned on Wednesday to a charge to Income in the amount of EUR 175 million on a “big case”. As the newspaper reported, citing persons familiar with the issue, it’s a credit to Wirecard.
Accordingly, the Commerzbank as part of the relevant Lending syndicate of 15 banks is now one of the creditors of the insolvent Munich-based group. In addition to the so-called risk result, 175 million euros-loaded “Corona effects-based”, the Commerzbank in the second quarter of this year, with 131 million euros, as the Bank informed.
as a result of these impairments, net income attributable to shareholders quarter profit declined, according to Commerzbank’s year-on-year by 21.2 percent to 220 million euros. In the second quarter of 2019, the Bank had made 279 million Euro profit. In the first half of this year was, therefore, a total of even a loss in the amount of 96 million euros. In the prior-year period, had been the bottom line, a profit of 401 million euros.
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