Germany banking: NordLB shows urgent need for reform

Publicly owned regional wholesale banks were part of the financial architecture behind Germany’s post-war economic miracle. 

However, globalization and European integration – especially the advent of a stronger EU single market and competition framework – has rendered the Landesbanken increasingly obsolete. WestLB’s sub-prime losses and the later and longer rusting of northern Landesbanken’s shipping portfolios are the inevitable harbingers of the eradication of their independence.

Now, negative rates and the less partial supervisory policy of the banking union are further hastening their demise – above all the ECB’s increasing determination to bring down non-performing loan ratios across Europe.