A renewed focus on profitability and strategic refocusing among German banks leads Moody’s Investors Service to believe that “the country's banks will not undergo a systemic crisis”, the rating agency said in a report on the German banking sector, published today.While Moody's is maintaining its negative outlook on German banks’ ratings, it does not believe a systemic banking crisis is imminent in Germany. It said this is because all banks are taking steps to improve their profitability by cutting costs, enhancing their risk management practices (to comply with Basel II) and rethinking their business models.
"The main challenge facing the German banking system at the moment is its very low profitability, which is the result of a combination of structural, management-related and cyclical problems," Moody's added.
The rating agency also noted that German banks' poor profitability can no longer be underpinned by hidden reserves, as these are now depleted.
More on Risk Management
Governor of Swedish central bank discusses the quest for Basel III consistency
US bank takes one-off charge to reflect cost of uncollateralised receivables
Abstract We describe how networks based on information theory can help measure and visualize systemic risk, enhance diversification, and help price assets. To do this, we first define a distance measure...
Treasurers taking time out following removal of €/Sfr cap
Sign up for Risk.net email alerts
Sponsored video: Tradeweb
Multifonds talks to Custody Risk on being nominated for the Post-Trade Technology Vendor of the Year at the Custody Risk Awards 2014
Sponsored webinar: IBM Risk Analytics
Nominated for two technology awards
There are no comments submitted yet. Do you have an interesting opinion? Then be the first to post a comment.