Economic crisis: hardness test for the bankers

The Board of Directors of the Commerzbank wanted to know: for A whole afternoon, the leaders sat together at Germany's second largest private Bank this spring

Economic crisis: hardness test for the bankers

The Board of Directors of the Commerzbank wanted to know: for A whole afternoon, the leaders sat together at Germany's second largest private Bank this spring and the credit documents from dozens of by worked hard together major companies, clients viewed the institution of money debts, and as a loose candidate. "We went through the case for case", says Marcus Chromik, Chief Risk Officer of Commerzbank.

Normally, risk management is different, the bankers are based usually heavily on computer models. "But in the Corona-crisis, the forecast failure models, because she is so unique", says the Commerzbank Board of managing Directors Chromik. Therefore, now operated amplified case by case analysis. In comparison to the global financial crisis that hit twelve years ago, after the collapse of Lehman Brothers, the Corona-crisis "intellectually much more sophisticated," says the physicist.

The pandemic and how it eats through the economy – this is uncharted territory for the bankers. "Unprecedented challenges" would have to master the credit institutions, the European banking authority, the EBA warned recently. The industrial States of the OECD has just published another gloomy forecast By at least 6 percent of the global economy will collapse in performance this year. This is doubly appreciated as much as the International monetary Fund in mid-April – a crash of epochal extent, as it has been given to him since almost a century and appeared a few months ago unthinkable. In comparison, the recession after the world financial crisis is a storm in a glass of Water.

For the banks this means, of course, nothing Good: unlike in 2008, this Time they are not the starting point and the cause of the crisis, but they could be Victims anyway. If millions of people are losing their jobs and their rates can't pay loans and mortgages, when hundreds of thousands of companies from SMEs to large corporations – in Existenznot, interest and repayment do not operate, then high write-downs on their demands threaten the institutions.

Billion-dollar Corona-provisioning

Already, the damage is great now. In the first quarter was affected only partially by the disease, have formed the leading banks globally, around 80 billion dollars on provisions for feared credit losses. Alone, the three American banking giants JP Morgan, Citigroup and Bank of America accounted for a total of 20 billion dollars. Also European institutions such as Santander, HSBC and Barclays have crossed each billion for the expected Corona Crash in their loan books. However, this is only the beginning.

Many banks in Europe, with Ballast in the crisis: Now avenge it, and that, in the past few years has not managed to be profitable, and your Legacy to win. By the end of 2019, the banking sector of the Eurozone is groaning under the problem loans of more than half a trillion euros. Almost half of the institutions are not earned cost of their capital.

Updated Date: 20 June 2020, 20:19

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