Energy crisis, inflation, rapidly rising key interest rates – turbulent months are ahead for German banks.
(Photo: dpa)
Frankfurt Europe’s bankers are preparing for an economic crisis. On the first day of the Handelsblatt Bank Summit, both Deutsche Bank CEO Christian Sewing and his colleague Andrea Orcel from the major Italian bank Unicredit made it clear that they believe a recession is inevitable. Today, Federal Finance Minister Christian Lindner (FDP) will explain how he sees the current situation and what role politicians have assigned to the banks in overcoming the crisis.
In addition, the banking summit is about the future of fintechs and cryptocurrencies. In addition, bankers are eagerly awaiting the decision of the European Central Bank (ECB). Do the central bankers really dare to hike interest rates by 0.75 percentage points in the fight against inflation? Or is the fear of the impending recession so great that it stays at 0.5 points? Five questions that will become important in the coming hours:
1. How big is the political leeway?
Russia has stopped its gas supplies to Germany. How severe will the resulting recession be? Does the state still have options to provide support after the various relief packages? The interest rate hikes by the ECB also limit the Federal Minister of Finance’s scope because the interest costs for future government bonds will rise significantly.
How can private investment be mobilized in this difficult situation? Handelsblatt editor-in-chief Sebastian Matthes Lindner will ask about all of these problems.
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2. Can the incumbent banks turn things around?
Commerzbank has made significant progress in recent months. But Germany’s second largest private bank is still in the middle of restructuring. Can the conversion succeed in view of the looming economic crisis? Manfred Knof, the institute’s CEO, will report on this. One of the most important questions, not only for Commerzbank: How hard will the energy crisis hit German SMEs?
3. Can’t the Germans save more?
On Wednesday, Tanja Birkholz, head of Schufa, warned of increasing over-indebtedness among citizens. On Thursday, Commerzbank boss Knof and savings bank president Helmut Schleweis will provide further insights into the situation of German savers.
>> Read here: “Something’s brewing” – Schufa warns of increasing over-indebtedness
The Savings Banks have forecast 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. Now the focus will be on the consequences of this development for old-age provision, distributive justice and social peace in Germany.
4. Do fintechs need a strategy update?
Last year, young technology-oriented financial companies from Germany collected a total of 4.6 billion euros from investors in 183 financing rounds. In 2022, business with newcomers has cooled off. The number of financing rounds fell to 54 in the first half of the year, but the total remained robust at 1.86 billion euros.
One reason for the waning interest: the established banks are among the winners of the turnaround in interest rates, while the fintechs are among the losers, because future planned profits have to be discounted at a higher rate and are therefore currently worth less. Investor Ramin Niroumand, Dagmar Bottenbruch, Germany head of Silicon Valley Bank, and Jessica Holzbach, head and founder of Pile, will discuss what the future of fintechs looks like.
5. Does crypto have a future?
The market shakeout has hit the crypto world even harder than the fintech scene. Bitcoin, ether and other cryptoassets have lost two-thirds of their value since last fall. Hundreds of billions of dollars in wealth have vanished into thin air. Crypto exchanges like Celsius have collapsed.
Was the boom just a speculative bubble? What’s next for the blockchain, the technology behind cryptocurrencies? Despite the crash of Bitcoin and Co., not only crypto fans believe that the decentralized database technology still has the potential to provide a lot of innovations in the financial sector. Among the experts who will analyze the situation at the banking summit is Bitpanda CEO Eric Demuth.