Resistance test: Deutsche Bank is one of the ten most vulnerable financial institutions in Europe

Stand: 20:54 pm | Reading time: 4 minutes

reDeutsche Bank has once again struggled with the resistance test of the European banking supervisor EBA. Thus, their capital, which is supposed to protect them from crises, has decreased considerably during the stress test. According to the test, it is one of the ten most vulnerable financial institutions in Europe. The capital ratio of the institute has risen from about 14% to 8.1%, which corresponds to an extremely sharp drop in the event of a crisis.

The other German banks have also lost a lot compared to other countries. This was mainly due to their low profitability.

The worst of the German institutes has cut Hannoveraner Landesbank North LB. In the worst case, it can only rely on a capital cap of just over seven percent. After the crisis, only three European houses had less capital after the crisis: the British bank Barclays, the Italian bank Banco BPM and the British bank Lloyds.

Two different catastrophic scenarios were tested, namely a severe recession with a high unemployment rate, rising interest rates, rising inflation and declining real estate prices. In addition, a collapse of stock prices and bonds as well as a sharp collapse of currencies were recorded. The resilience of a bank depended on the importance of developing its so-called core capital in simulated crises.

Experts see tougher review

A total of 48 institutes from 15 EU countries and Norway took part in the last month's stress test. The 37 banks in the euro zone alone, which faced supervisors, account for around 70% of the total balance sheet of all monetary union houses. In addition to the two large banks, Deutsche Bank and Commerzbank, the four Landesbanken BayernLB, LBBW, Helaba and NordLB, as well as the North Rhine-Westphalia Development Bank NRW-Bank and DZ Bank were also involved.

Of the 48 institutions audited, none achieved a capital adequacy ratio of 5.5% in the crisis scenario: Barclays reached 6.37%, the BPM 6.67%.

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Turning in the stock market

According to experts, this year's stress test is much more difficult than two years ago. In addition, he also had particularities that made the task particularly difficult for local institutes. For Germany and its banks, an economic shock would be particularly serious. The Federal Republic is therefore a very open economy, which depends heavily on foreign demand, which increases the impact of the economic crisis.

In addition, this year's stress test was designed so that the effect on government bonds, in which many institutions are heavily invested, is rather moderate. This mainly benefited banks in the periphery. If heavily indebted country bond prices fall sharply in times of crisis, this would also have a major impact on institutions. However, this was not planned in the stress test.

"We are not yet profitable enough"

In addition, the badumption that, in a time of crisis, interest payments from non-performing loans originated mainly from Italian banks with a high level of loans, which are only used irregularly or inadequately. , very accommodating. The German institutes have hardly been able to profit from it.

On the contrary: the fact that their requirements are normally of relatively high quality meant that in the catastrophic scenario the collision was all the more violent. In addition, banks were barely able to take advantage of rising interest rates as German banks mainly used long-term and fixed-income loans. But the biggest problem for local institutions is artisbad: they earn far too little compared to their European competitors.

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This makes them particularly vulnerable in a crisis because they can not compensate for income losses. This is especially true of Deutsche Bank. Chief Financial Officer James von Moltke said, "The stress test shows that our risk profile is absolutely solid, but we are not yet profitable enough." That's exactly what the bank is working on, said the director.

Von Moltke does not expect Monetary Monitors to ask for more capital for the crisis in the future. The quality badessment in the case of Deutsche Bank was also not taken into account, or many of the problems already solved in the test were included, criticized by Moltke.