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Europe’s Banking Outlook Uncertain
World Economy

Europe’s Banking Outlook Uncertain

Groupe BPCE, the 2nd largest banking group in France, Chairman Francois Perol said the outlook for the European banking industry is more uncertain in some respects than in 2009 as negative interest rates squeeze margins and digitalization changes the model, Bloomberg reported. “Chinese growth is decreasing, oil prices are down with unexpected consequences, geopolitical risk is in a lot of areas,” Perol told reporters on the sidelines of the Ambrosetti Workshop in Cernobbio, Italy. Banks also have to deal with structural changes including “digitalization, a huge change for our retail banking business, negative interest rates and a changing regulatory landscape,” he said. European banks have suffered from record-low interest rates, slumping commodity prices and cooling emerging-market growth. Concerns about asset quality and capital adequacy have contributed to a selloff in shares. A gauge for European banks is down 25% this year, the worst performance among the 19 industry groups on the Stoxx Europe 600 Index, led by Italian lenders. Negative interest rates are hurting profitability across the financial sector, said Perol.

 

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