February 2002
The Grossbanken have nowhere left to hide
Germany’s big four private-sector banks have enormous assets but dismal profitability, return on equity and market share and weak cost control. Put well into the shade in retail business by the local savings banks and state banks, which have peculiar funding advantages, they are ill-equipped to meet the challenge of the coming European financial market without frontiers. They are scrabbling around for survival strategies but few of them impress. Jennifer Morris reports on a banking system on its knees
Step one in the Bundesbank's approach to banking
supervision: ignore a problem and it will just go away. Like an
indulgent father unwilling to accept his son's failings, the
central bank is doing its best to pare down the travails of
Germany's private banks to a temporary blip in a history of
otherwise strong earnings growth and sound profitability.
"We've had some discussions about the stability of the banking
system and I must underline that there are no concerns of a
systemic nature," says Edgar Meister, board member of the
Bundesbank and chairman of the banking supervision committee of the
European system of central banks. "I think the big banks are well
managed. They have hidden reserves and the kind of provisioning
done in the past helps them overcome this lag in profitability. So
I am optimistic that the big commercial banks have a really good
chance of competing with other international banks." ...
This is archived content. Your current settings does not currently allow access to the archive. To gain access visit the subscription page or call our hotline on +44 (0)207 779 8999.
If you are a trialist or subscriber, please enter your username and password at the top right-hand side of euromoney.com
Subscribers to Euromoney benefit from:
Level 1:
- Online access to the past 12 months content
- Tailored RSS news feeds direct to your desktop
- News delivered directly to your mobile device or PC
- Personalised email newsfeed of 'Top stories' and 'Breaking news'
Level 2:
- Exclusive access to euromoney.com - Read the latest issue early online, search for specific developments by region or sector, interrogate the results of Euromoney's benchmark polls, and view the archive dating back to 2000
- 12 monthly issues of Euromoney magazine
- More than 30 specialist research guides free
- The results of Euromoney’s polls and surveys
- Tailored RSS news feeds direct to your desktop
- News delivered directly to your mobile device or PC
- Personalised email newsfeed of 'Top stories' and 'Breaking news'
Click here to subscribe