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...
