Posted on 11/24/2023 8:37:09 AM PST by EBH
Germany’s major banks need to increase their provisions for non-performing loans, as corporate insolvencies and credit risks mount, according to Bundesbank Vice-President Claudia Buch.
Europe’s largest economy has been dubbed the “sick man of Europe” by some economists, after entering a technical recession earlier this year while economic activity faces further downward pressure from a collapse in construction.
Lawmakers in Berlin are meanwhile scrambling for solutions to a developing budget crisis that could threaten the future of the country’s coalition government.
Like the rest of the euro zone, the German economy is dealing with a rapid rise in interest rates, as the European Central Bank took its main deposit facility from a record low of -0.5% in September 2019 to a record-high of 4% in September 2023.
“I will say that, actually, the financial sector dealt quite well with this increase in interest rates. At the same time, the full effects are not yet visible, so they haven’t really worked their way through the balance sheets of the banks, and this is why we caution the banks as usual,” Buch told CNBC’s Annette Weisbach on Wednesday.
“Resilience is really of utmost importance at the current juncture. The banks are highly profitable at the moment, and I think it’s good if they use this profitability to increase their resilience — sufficient capital, sufficient liquidity but also investments into IT to shield against cyber risks.”
(Excerpt) Read more at cnbc.com ...
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“sick man of Europe”.
I would think Turkey could be offended by the loss of their traditional title.
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