The Swiss bank has just announced a hiring freeze. Similar cuts could also threaten other financial institutions.
(Photo: Reuters)
When many economic crisis symptoms reinforce each other to form a threatening general economic situation, then in Anglo-Saxon technical jargon one speaks of the “perfect storm”. The term doesn’t really translate into German. Of course, these linguistic subtleties do not change the dangerous nature of the phenomenon.
How threatening the current mix of high inflation, energy crisis and the aftermath of the pandemic is can be seen from the current economic index of the Munich Ifo Institute, which has collapsed much more than expected. The tenor of the survey: Germany is on the verge of a recession.
>>Read here: More than 40 percent market value lost – the German banks are afraid of the future
This is extremely bad news for the banks in Germany and Europe. Starting this week, the institutes will present their figures for the second quarter, which in many cases will still be quite attractive. But what really matters is the outlook for the rest of the year and beyond, and that looks set to be pretty bleak.
Top jobs of the day
Find the best jobs now and
be notified by email.
The perfect storm lives up to its name, all business areas of the banks will suffer from the looming crisis: in private and corporate business there is a risk of higher loan defaults. In investment banking, traders will continue to benefit from the sharp price swings on the markets for a while, but in the IPO business and when advising on takeovers, 2022 threatens to become a lost year. Even otherwise reliable businesses like wealth management or asset management will suffer as price falls reduce fee income and frightened customers withdraw capital.
How real this threat is is shown by developments at the Swiss bank Julius Baer, which announced a hiring freeze and tougher austerity measures on Monday. Such reports will accumulate in the coming weeks.
More: Bundesbank board warns German banks: “Do not underestimate the extent of the problems”