Mario Draghi: Europe has too many banks

European Central Bank chief Mario Draghi attends the Committee on Economic and Monetary Affairs at the EU headquarters in Brussels on June 21, 2016. Draghi said on June 21 the ECB is prepared for all eventualities regarding the British EU referendum later this week, but the economic impact of the vote is difficult to predict. / AFP / JOHN THYS (Photo credit should read JOHN THYS/AFP/Getty Images)

European Central Bank chief Mario Draghi

https://www.ft.com/content/657f198e-cb51-3309-a34b-419c7fcb918a

The eurozone has too many banks, Mario Draghi has said, blaming overcapacity rather than the European Central Bank’s monetary policy for low profits among commercial lenders.

Speaking at a conference of the European Systemic Risk Board on Thursday, Mr Draghi took on critics from the banking sector, who have blamed the ECB’s negative interest rate policy for squeezing their margins, reports Claire Jones in Frankfurt.

The ECB president pointed to a report saying the banking sector had “outgrown capital markets” and said the high number of banks was a big factor on the low levels of profitability in the sector.

The ECB’s deposit rate is currently at minus 0.4 per cent, meaning the central bank imposes a levy of the same amount on a portion of reserves parked by lenders at the central bank.

Overcapacity in certain banking sectors also meant their costs were too high, as an environment of too many lenders makes it difficult for banks to pass on costs to their customers, added Mr Draghi.

The problem with over reliance on banks was that their lending patterns tended to exacerbate the financial system’s tendency towards boom and bust. On the other hand, capital markets “were a useful spare tyre”, said the Italian.

The eurozone’s capital markets, in which firms can issue bonds and equities, are much smaller than those in the US — which the ECB believes impedes the effectiveness of its quantitative easing policy of corporate and government bond buying.

Mr Draghi’s comments come after the ECB revealed that its latest policy measure to boost bank lending by providing cheap loans (TLTRO-II) had attracted a take up of €45bn in its latest round.

———-

he maybe right..but who helped prop a whole heap of them up as zombie banks?

“The ECB president pointed to a report saying the banking sector had “outgrown capital markets” and said the high number of banks was a big factor on the low levels of profitability in the sector.”

some bubble popping will cull the herd i reckon..

401

~ by seeker401 on September 30, 2016.

4 Responses to “Mario Draghi: Europe has too many banks”

  1. “The ECB president pointed to a report saying the banking sector had “outgrown capital markets” and said the high number of banks was a big factor on the low levels of profitability in the sector.”

    …they want more concentration in the sector …in their hands, I presume…in order to maximise profits…

  2. Reblogged this on World4Justice : NOW! Lobby Forum..

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