Problems have continued to mount for the German banking sector in 2019. According to Ronit Ghose, the global head of banks research at Citibank, German lenders are in a much worse position than their European counterparts—and that even includes Italy when it comes to profitability.
It is fair to say that the banking sector in Latvia is now being closely scrutinised in a manner that it has not experienced in recent times. The latter half of February in particular witnessed a series of major incidents being reported that have severely dented confidence in the diminutive Baltic nation’s banking industry.
The Markets in Financial Instruments Directive II (MiFID II)—a major package of financial reforms for European markets—is due to be introduced at the start of 2018. The new rules are aimed at providing considerably more protection for investors
Catalonia’s drive for independence from Spain is nothing new, but it crystallized in the Catalan parliament’s recent vote for independence. On the surface, it may appear that this relatively prosperous northeastern region would be better off if free from its mother country, but the long-term repercussions may not be rosy; the most likely outcome is that the political row will settle on middle-ground.
Italy’s banking sector, mired in bad debt and low profitability, has been labelled Europe’s weakest, but fortunately it is making progress in addressing long-standing issues—with a little help from the government. Recent bank bailouts have given renewed hope to struggling lenders, while raising concerns that the arrangements conflict with Europe-wide rules prohibiting the use of taxpayer funds to bail out failing banks.
The US dollar is the world’s reserve currency, the representation of US economic might on the global stage and the de facto currency unit for the overwhelming majority of financial assets.
It cannot be denied that we learn from mistakes of the past, and so the 2007-08 financial crisis is a lesson that keeps on giving. Ten years later, most banks are in stronger positions, but only because the crisis has changed all the rules on liquidity provision and has led to much tighter relationships between central banks, governments, funding markets and financial institutions.
Quantitative easing and low interest rates were to work together to ignite roaring economic growth following the last financial crisis; in some parts of the world, monetary policy has set interest rates at zero (even below), but growth remains elusive and rock-bottom inflation rates coincide with interest rates. What went wrong?
At the beginning of 2017, the European Central Bank (ECB) confirmed that it will keep its benchmark rate unchanged at 0 percent and its deposit rate at -0.4 percent. To sustain European economies, the ECB will also continue its bond-buying program with 80 billion euros (US$85 billion) per month until the end of March.
Paying a fee to deposit money in a bank savings account is a concept most people cannot fathom, but German banks have begun to charge wealthier retail customers. Bank managers claim this is a result of the ECB’s negative interest rates, which penalize them for holding funds with the ECB.