Deutsche Bank, ING and Commerzbank have all been in the headlines in recent weeks. Australian lenders too have faced a grilling from lawmakers over bad practice. David Pollard looks at the reasons why and the impact it’s having on banking stocks that have lost hundreds of billions of euros in value this year.
Banks: no relief as sector pressures intensify
(SOUNDBITE) (English) COMMONWEALTH BANK OF AUSTRALIA CHIEF EXECUTIVE, IAN NAREV, SAYING:
“Poor outcomes sometimes come from human error, no one company or individual is perfect ….”
It’s not a new crisis, some say, just an old one that hasn’t gone away.
Deutsche Bank’s tribulations stirring memories of 2008 – and a sector in the dock in the years after.
Narev is the first boss of Australia’s big four banks before lawmakers.
After scandals involving misleading advice, fraud and rate rigging.
An industry under scrutiny as under financial pressure …
(SOUNDBITE) (English): DARREN SINDEN, INDEPENDENT MARKET ANALYST, SAYING:
“Between a combination of very low or negative interest rates and an increasing regulatory burden, it’s basically becoming a commoditised business … Now, single digit profit margins are not uncommon and it’s not really clear where banks will make money in the future.”
The pressure on Deutsche Bank’s shares has eased.
Last week’s news of, potentially, a 14 billion dollar US fine sending them to record lows.
Germany’s biggest bank has big friends – BASF, Daimler, Siemens and others defending it in the press over the weekend.
Even JP Morgan chief Jamie Dimon – he sees no reason Deutsche shouldn’t prevail, he said.
SOUNDBITE) (German) CAPITAL MARKETS ANALYST AT ODDO SEYDLER BANK, OLIVER ROTH, SAYING:
“It is important for Deutsche Bank to allow calm to take over because it stirred up a lot of trouble. There was a Deutsche Bank bashing. And many investors probably took part in it to make gains.”
But here – more damage.
Just days after Commerzbank announced 20% of its staff were to be axed, 7,000 jobs at ING to go – nearly half of them in Belgium.
(SOUNDBITE) (Dutch) ACV BANKEN UNION REPRESENTATIVE, HERMAN VANDERHAEGEN, SAYING:
“It’s a catastrophe … A company that makes billions in profits destroyed more than 3,000 jobs today.”
European bank stocks are down over 20 per cent in the year so far.
220 billion euros wiped off their market value.
A crisis hurting banks, their customers – and, increasingly, their workers.