Europe’s banks: The chronic continent

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source link Europe’s banks IT MUST have been an exquisite moment. On September 30th the central bank in Athens issued a statement reassuring investors that the Greek banking system was safe—from a crisis engulfing Germany’s flagship bank. Any Schadenfreude felt in Europe’s periphery at Deutsche Bank’s tumbling shares should be stifled, however. Deutsche is not about to fail: it can survive a harsh funding squeeze, its solvency is not in doubt and if push came to shove, the German government would surely support it. But many of its woes are symptomatic of problems that bedevil the whole continent.
Plenty would deny that. Deutsche is more leveraged than its peers; it is unusual in lacking a crown jewel around which it can base a business model; and it has a stack of derivatives whose prices are hard to observe in the market. More positively, it is light on the non-performing loans that clog the balance-sheets of banks in places like Italy. But in other ways its problems have a very familiar ring. Deutsche is struggling to make a decent return. It has taken …

European banking jobs: Career breaks

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FRANK LLOYD WRIGHT quipped that “the modern city is a place for banking and prostitution and very little else.” Little did the early 20th-century architect know how banks would flourish, hoovering up much of the world’s talent by the early 2000s. But this golden age is ending: bankers’ jobs are at risk from the digital revolution on the one hand, and falling profits on the other.
Nowhere have bankers fallen from grace with such a bump as in Europe. This week ING, the Netherlands’ largest bank, announced that up to 7,000 jobs would be cut in the next five years. Commerzbank, Germany’s second-largest bank, had already reported it would cut its workforce by 9,600, nearly a fifth.

Across Europe, bankers are packing up. In Britain more than 10% of bank jobs were cut between 2011 and 2015; in Germany the workforce has shrunk by around 20% since 2001. Since the start of the year Credit Suisse has got rid of nearly 5,000 …

Banking in Europe: Autumn blues

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QUEASY calm is unpleasant, but it beats sickening panic. Late on September 29th Deutsche Bank’s share price lurched downwards again, to a 34-year low, after Bloomberg reported that “about ten” hedge funds had switched some business away from the troubled German lender. That capped a stomach-churning fortnight, after America’s Department of Justice (DoJ) requested $14 billion to settle claims that Deutsche mis-sold residential mortgage-backed securities (RMBSs) before the financial crisis. Hopes that it might settle with the DOJ for $5 billion-odd, though so far unfulfilled, have since brought uneasy respite. On October 5th Deutsche’s shares were some 20% above their nadir.  

A swift, affordable agreement would end uncertainty about the bill and quieten chatter, pooh-poohed by government and bank, that the German state might have to prop up the country’s biggest lender. It would also buy breathing space. …