Public Banks President Sees Massive Reduction in Banking Sector

Bilanzpressekonferenz Bayern LB
Source: Reuters

Johannes-Jörg Riegler, the president of the German Association of Public Banks, sees massive changes on the horizon in the banking sector in both Germany and Europe.

In an interview with Handelsblatt, Mr. Riegler said many banks will have to shut their doors because they cannot cover their capital costs due to the European Central Bank’s rock-bottom interest and negative deposit rates.

“A third of the banks in Germany and Europe will disappear from the market,” said Mr. Riegler, who is also the chief executive of BayernLB, Bavaria’s state bank.

Mr. Riegler said banks have bought some time by automating processes, closing branches and charging for services that were once free. In the end, however, they might be forced to pass on negative deposit rates to retail customers as well as corporate clients.

“Depending on how the ECB’s monetary policy looks in the future, the developments will not spare retail customers,” Mr. Riegler said.

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