Banking Industry Gets a Needed Reality Check
Trading has covered a multitude of sins for Europe’s banks. Commerzbank provides a less rosy assessment of the pandemic economy.
There’s a cost to all of this.
Photographer: CHRISTOF STACHE/AFPEuropean bank bosses are on the front foot again. During the brutal first half of 2020, some lenders posted losses amid soaring provisions for bad loans. Now they’ve been emboldened by a third-quarter profit rebound. Most of the region’s bankers are sounding confident that the worst of the pandemic pain is behind them, despite the new wave of lockdowns. A dose of caution is warranted.
Keen as they are to persuade regulators that they’re fit enough to resume dividends and boost trader rewards, Europe’s banks might be underplaying the potential impact of the economic contraction and an ongoing squeeze on profit margins. For a more sobering assessment of the industry, look at Germany’s Commerzbank AG, which has less exposure to the booming trading business than its rivals and expects to lose money this year.