European banks are not in crisis, but their profits are: Austrian finance minister

The profitability of European banks is in crisis rather than the system itself, Austria’s finance minister told CNBC on Thursday, amid speculation about the health of Germany’s major banks.

“I don’t think we have a banking crisis (in Europe), what we have is a profitability crisis,” Austrian Finance Minister Hans Joerg Schelling told CNBC on Thursday.

“They make less money and to withstand shocks you have to make more profit, and that is a common opinion of the International Monetary Fund, the World Bank, the OECD, everyone,” said- he declared.

Hans Joerg Schelling, Austrian Finance Minister.

Akos Stiller/Bloomberg via Getty Images

Schelling’s comments come as the fate of some of Germany’s top lenders takes center stage for investors amid speculation that Deutsche Bank may seek state aid, although the bank insists it will there is “no reason to worry”. Any potential state intervention, however, could have far-reaching repercussions and poses a systemic risk as it has ties to many other global banking institutions.

Meanwhile, Commerzbank announced on Thursday that it was cutting 7,300 net jobs and would stop paying dividends for the time being as part of a drive to sustainably increase profitability by 2020, the bank said. bank in a statement.

Austria’s finance minister said the current discussion on European banks was similar to concerns over the single currency area but, similarly, it was not in trouble either.

“It’s the same as the eurozone discussion – we don’t have a euro crisis, we have a debt crisis. The euro is relatively stable,” he said.

“Of course we have problems, like Greece and Italy with their non-performing loans and of course Austria had problems with the banks and we just liquidated one of them. But we we just have to make it clear that the financial markets act and the financial markets are able to access the market,” he said.

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