Russian Gas Threat Has German Bankers Fearing Default Spike

Germany’s banks would be forced to put extra funds aside to cover a potential spike in defaults if the country were to get cut off from Russian gas, several senior bankers said.

The scenario would lead to a recession in Europe’s largest economy and require lenders to back up corporate loans with more capital, BNP Paribas Germany head Lutz Diederichs said Monday at a conference in Frankfurt. He echoed comments made by Commerzbank Chief Financial Officer Bettina Orlopp published over the weekend in an interview with the weekly Focus Money.