The Minister of Finance is critical of the German financial institutions, which are increasingly falling behind in international comparison.
(Photo: IMAGO/photothek)
Berlin After years of low profitability, Germany needs better financial market regulation so that the country’s banks can compete globally, Finance Minister Christian Lindner said at a conference on Wednesday.
Since the financial crisis more than a decade ago, the US competition has increased its stock market value and market share, while the German institutes have lagged behind in all areas, said Lindner at the International Bankers Forum in Berlin.
“We cannot be satisfied with the profitability of our banks in Germany,” said Lindner. “Of the internationally active German commercial banks, there are no longer any top spots.”
The minister partly blamed banking regulation for the malaise. This focuses too much on stability and consumer protection and too little on competitiveness and profits.
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In addition, locational weaknesses such as poorly developed internet, dilapidated schools and excessive tax rates deterred highly qualified workers from the financial sector.
Banks should provide money for innovations
The banks’ ability to secure the liquidity of the real economy is not enough, Lindner continued. The financial industry must also provide capital for new ideas and support growth through innovation. Financial institutions are too often mentioned in connection with “problems”.
German banks, led by Deutsche Bank and Commerzbank, have been lagging behind other institutions in terms of profitability for more than a decade. Many observers blame structural factors for this, above all the dominant role of the savings banks and cooperative banks in the German market.
However, restructuring plans at the top dogs Deutsche Bank and Commerzbank are now beginning to show signs of success, and rising interest rates are now boosting the lending business again. Lindner said in September that the federal government, as Commerzbank’s largest shareholder, was very satisfied with its performance.
More: Regulators are relaxing capital rules for major European banks