As negative rates go deeper and last longer, the impact of the poor domestic positions of Commerzbank and Deutsche Bank is coming to a head.
More than any other big European banks, Germany’s biggest private lenders now stand almost no chance of earning their cost of equity. Efficiency measures alone won’t mend this, even if their workers brook deeper cuts.
Was this always the trade-off: between a strong German economy and sovereign, and the underperformance of the international banking champions?
Big banks work when they have large market shares at home.
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