FRANKFURT AM MAIN: German Foreign Minister Olaf Scholz on Thursday said it was “a problem” that the country’s big banks had fallen behind their rivals on the global stage, depriving Germany’s export-oriented companies of strong local lending partners.
Big German and European banks have “lost importance in global rankings” in the 10 years since the collapse of US investment giant Lehman Brothers brought the sector to its knees, Scholz told a banking conference in Frankfurt.
“I believe it’s a problem for a large economy like Germany’s, and for the European Union, that the banks that are active here don’t have the scale or global reach needed to support the economy.”
Germany’s export success, he added, depends on companies being able to compete globally.
“The financial sector and the banks have to be able to accompany them.”
The loss of confidence in Germany’s flagship Deutsche Bank and Commerzbank has been obvious from declines in their share prices.
Deutsche now has a market capitalisation of just under 21 billion euros ($24.5 billion), even after raising some 27 billion euros in new shares between 2010 and 2017 through several capital increases to shore up its balance sheet and invest in growth.
Commerzbank, which had to be rescued by the German state in the wake of the 2008 crisis and has raised 13 billion euros since then in new share issues, today has a market capitalisation of some 10 billion euros.
Both lenders face the humiliating prospect of tumbling out of flagship indices next month.
Deutsche could be dropped from the EuroStoxx 50 during the annual rebalancing of the eurozone benchmark on September 3.
Commerzbank meanwhile is tipped to be axed from Frankfurt’s DAX 30 after a three-decade presence on the blue-chip index.
The two lenders are the frequent target of merger rumours, and the Financial Times wrote this week that many observers believe a tie-up is “not seen as a question of if, but when”.
Beleaguered Deutsche has said that it plans to slash over 7,000 jobs, especially in the US and Asian investment banking businesses, as it refocuses on its European roots in a bid to turn the page on years of losses.
Commerzbank meanwhile is pushing ahead with a costly restructuring of its own, which includes shedding 9,600 posts by 2020. —AFP