BERLIN (Reuters) – the Low profitability of the European banks, as they need to invest in order to remain competitive in the digital era, risks triggering a vicious circle of lack of investment, and further, degradation of performance, say, of Germany, presented to the board of directors of the European Central Bank.
A member of the German council of economic experts Isabel Schnabel argues, prior to a press conference in Berlin, Germany, on November 6, 2019. REUTERS/Fabrizio Bensch
Isabel Schnabel, a well-known economist, has been set for the German to slot in to the board of directors of the central bank of the euro area, where it will pass, and Sabine Lautenschlaeger, who resigned in the midst of the controversy over the ECB in dovish fiscal policy.
In a speech in Berlin on Wednesday, Schnabel has warned that low profitability might be a financial stability issue for the euro area. However, they have yet to be formally confirmed by the board of directors ‘ meeting, Schnabel is the only candidate.
“The state of European banks have been very tight,” she told Reuters. “If the banks also have a low income, it is difficult for them to build up capital and increase their resilience. This is a problem for financial stability.”
As for her comments made after the presentation of a report on the German economy and that of the committee of economic experts, which she is, at this moment, in relation to the European banks, they are in a live debate in Germany about the challenges faced by the high street banks.
Since the failure of its planned merger with Commerzbank, Deutsche Bank has been undergoing a painful restructuring, shedding thousands of staff members in an attempt to regain the initiative from a more streamlined, online-led upstarts.
Schnabel, who has yet to be allocated to a particular portfolio, the board of directors as the new President of the ECB, Christine Lagarde, said that she expects that the consolidation process in the German and European banking sector, Germany’s state-owned Banks, in particular, is ripe for consolidation.
“We need to have a completed banking union, and that we have made to the development of the capital markets union,” she said, following in the footsteps of the Finance Minister, Olaf Scholz, is to have the phone call earlier on Wednesday, a banking union with a European deposit guarantee scheme.
The request of the bank, the resilience of loan was made to the act by the prospect of other tech companies, after Facebook, the Scale project is in the process of creating movement, in finance, is further straining the system of the competition.
“The biggest danger that I see is that, at a given point in time, we see a market that is used by a large technology company. Balance is just a taste,” she said. “And then the banks will really be able to be in a situation where they still have a huge balance sheet, but will no longer be competitive.”
Reporting by Klaus Lauer; Writing by Thomas Escritt; Editing by Paul Carrel