The rest of 2022 is likely to be quite turbulent for banks in Germany and Europe.
(Photo: dpa)
Frankfurt Given the long list of risks, Europe’s banks have come through 2022 quite decently so far. One reason for this: the institutes are among the beneficiaries of the turnaround in interest rates, which is also picking up speed faster in Europe than many expected. But the real endurance test is yet to come.
Russia has suspended its gas supplies to Europe for an indefinite period – the energy crisis is coming to a head. Many experts believe a recession in Europe is almost inevitable. At the Handelsblatt banking summit on Wednesday and Thursday, top bankers, politicians and supervisors will dare to assess the current situation and forecast the future of an industry that is once again facing difficult times. Five points that matter:
1. How badly will the energy crisis hit the banks?
Right at the start of the banking summit, Deutsche Bank boss Christian Sewing will answer questions from Handelsblatt editor-in-chief Sebastian Matthes. One of the key questions is: will the energy crisis turn into a recession? And how hard will the economic crisis hit the banks?
>> Read here: Citi Europe boss Kristine Braden: I’m not worried about the German economy
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So far, most experts consider a new financial crisis to be unlikely, but the uncertainty of the forecasts has rarely been as great as it is today. Also because it is not only a matter of economic models, but above all of how the war in Ukraine is developing and how the unpredictable aggressor Russia is behaving.
2. Is a new debt crisis imminent in the euro zone?
Inflation is becoming a permanent risk. That is why leading heads of the European Central Bank (ECB) have assured in the past few days that the central bank will take tough action, even if the price for this should be a recession in the monetary union.
What does this mean for heavily indebted euro countries like Italy? Especially since the third largest economy in the euro zone is in the middle of a political crisis and a government led by the post-fascist Fratelli d’Italia party is becoming increasingly likely in the upcoming elections. Andrea Orcel, CEO of the major Italian bank Unicredit, will analyze the situation at the banking summit.
3. How well are the banks prepared for the impending turbulence?
Only recently, in an interview with the Handelsblatt newspaper, Raimund Rösler, Germany’s top bank supervisor, made it clear that the rapid rise in interest rates could overwhelm some institutions. At the banking summit, the President of the German financial regulator Bafin, Mark Branson, will explain how he assesses the risks and where he sees the weak points.
4. What about German savers?
Savings Bank President Helmut Schleweis has already warned that up to 60 percent of Germans will soon have to use their entire income for subsistence and that there will be no money left over to save. The savings cushion from the Corona period have now apparently melted away in many households.
On the second day of the bank summit, Schleweis will explain the consequences of this development for old-age provision. It will also deal with the question of how small and medium-sized companies and the self-employed can cope with the energy crisis and inflation.
5. What can the state do?
Can the relief packages that the federal government has launched to cushion the economic consequences of the Ukraine war really do their job? That is one of the questions that editor-in-chief Matthes will discuss with Federal Finance Minister Christian Lindner (FDP) at the beginning of the second day of the summit.
The bankers will also be interested in how Lindner intends to strengthen the competitiveness of their industry. After experiencing the financial crisis, the grand coalition took a rather critical stance towards the banks for many years.
More: Bafin bank supervisor warns: “Two-digit number of banks are getting serious problems”