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EU Economics

SHOCK WARNING: EU banking crisis to continue for YEARS

EUROPEAN banks are expected to continue to struggle for a number of years, the latest analysis has indicated.

Banks across the continent have limited ways to become more profitable, according to in-depth analysis by business consultants Ernst and Young.The financial institutions will struggle as any “noticeable” increase in interest rates with the eurozone is unlikely and the balance sheets of the southern European banks will continue to be burdened by toxic loans.

The consultants predicted European banks would close branches, cut jobs and increase fees for customers in a drive for profits.

EU banks will continue to struggleGetty

Banks in the EU will continue to struggle, according to Ernst and Young analysis


US banks are in a much healthier state, according to the analysis, benefitting from higher interest rates and strong capital markets on the other side of the Atlantic, meaning profit margins are higher compared to banks within the European Union (EU).Comparing equity ratios – which shows how a bank’s equity is priced over a particular period – the ten largest US banks significantly outperformed the 10 largest banks in the EU in terms of profitability in the first half of 2017.

For the US banks, the rate climbed from 8.8 to 10.6 per cent, with the European banks from 5.6 to 5.9 percent.

EU banking crisis - JP Morgan ChaseGetty

JP Morgan Chase head office in New York


HSBC head office in LondonGetty

HSBC’s head office in Canary Wharf in London


Deutsche BankGetty

European banks, such as Deutsche Bank will continue to struggle in the coming years


“Despite the slight profit plus this year, the profit situation of European major banks is anything but satisfactory.”The consultants analysed the 10 largest banks in the EU, according to their balance sheet total, with the British HSBC, French BNP Paribas and Deutsche Bank ranked first.

In the US, the largest bank is FannieMae, followed by JP Morgan Chase and Bank of America

http://www.express.co.uk/finance/city/858652/EU-banking-crisis-eurozone-European-Union-banks-Deutsche-Bank-Ernst-Young-report

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