Brexit means EU needs bank champions, German regulator says

The UK’s impending exit from the European Union has increased the need for banking giants in the bloc that can rival those in London and New York, according to Germany’s central bank.

"The bigger the risk of a hard Brexit becomes, the harder we should try to develop global champions on the continent," Joachim Wuermeling, a member of the Bundesbank’s Executive Board said in an interview.

“It would be good to see a German bank among them, and I’m sure that will be the case.”

A decade after the financial crisis, European banks are still trading at a fraction of the valuations they commanded during boom times and many are struggling to move beyond repairing their businesses.

Deutsche Bank AG has held on to its ranking as one of the world’s most systemically important lenders despite struggling to restore growth after a series of failed strategy reboots.

Wuermeling didn’t say whether he would favor mergers between specific banks to create champions. Combining Deutsche Bank and smaller German rival Commerzbank AG has won the backing of government officials who are keen on creating a financial heavyweight to support the country’s exporters before a downturn strikes.

EU policy makers are racing to develop the bloc’s capital markets before Brexit potentially restricts firms’ access to London’s investment banks and market infrastructure.

“If you take the bank balance sheets of Frankfurt, Paris and Dublin together, we can compete with New York,” Wuermeling said.

* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER

ZAR/USD
16.33
(-0.06)
ZAR/GBP
21.08
(-0.04)
ZAR/EUR
19.33
(-0.03)
ZAR/AUD
11.90
(-0.03)
ZAR/JPY
0.16
(-1.15)
Gold
1949.72
(+0.03)
Silver
26.74
(+0.09)
Platinum
928.80
(+0.44)
Brent Crude
43.52
(-0.32)
Palladium
2356.01
(+0.63)
All Share
54673.65
(-0.66)
Top 40
50399.16
(-0.59)
Financial 15
9841.32
(-2.14)
Industrial 25
72558.00
(-1.08)
Resource 10
55438.10
(+0.58)
All JSE data delayed by at least 15 minutes morningstar logo
Company Snapshot
Voting Booth
Do you think it was a good idea for the government to approach the IMF for a $4.3 billion loan to fight Covid-19?
Please select an option Oops! Something went wrong, please try again later.
Results
Yes. We need the money.
11% - 1291 votes
It depends on how the funds are used.
73% - 8612 votes
No. We should have gotten the loan elsewhere.
16% - 1896 votes
Vote