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German Banks See Business Developing Positively, Survey Shows

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July 7 (Bloomberg) -- About 98 percent of German banks expect their business to develop positively in the next six months as the country’s economic growth offsets the debt crisis in southern Europe, according to an Ernst & Young survey.

About 22 percent of the 120 German lenders surveyed also regard the current business situation as “very positive” while 76 percent find it “satisfactory,” Ernst & Young said in an e-mailed statement today. A positive development in capital markets is forecast by 41 percent of the banks while 17 percent expect deterioration, the survey showed.

European Union leaders are insisting banks and insurance companies contribute to a new aid package for Greece after last year’s 110 billion-euro ($157 billion) rescue failed to stop the spread of the region’s debt crisis. Moody’s Investors Service has downgraded both Greece and Portugal’s credit ratings to junk amid concern they may not be able to reach the EU bailout terms.

The German economy grew 1.5 percent in the first quarter as companies boosted spending to meet increased export demand and construction rebounded from a slump in the previous three months. The German central bank forecasts that the economy will grow 3.1 percent this year while countries from Greece to Portugal are struggling amid a debt crisis that’s shaking the foundations of the euro currency.

About 25 percent of the surveyed banks expect to hire more people in the coming six months, while 12 percent expect their workforce to decline, Ernst & Young said.

To contact the reporter on this story: Niklas Magnusson in Hamburg at nmagnusson1@bloomberg.net

To contact the editor responsible for this story: Angela Cullen at acullen8@bloomberg.net

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