Friday November 22, 2019

Existential crisis as Europe’s banks near the point of no return

There is a non-zero chance that European governments may be forced to nationalise parts of the banking system, as there is little reason for investors to hold these shares now

25th August, 2019

Workers assemble Porsche Macan and Panamera cars at the Porsche factory in Leipzig in Germany Picture: Getty

The index of European bank stocks fell to an all-time low this month. The decline reflects poor earnings prospects for European banks, in particular German banks. If the fall continues at its current rate, there is an increasing risk that European governments may be forced to nationalise parts of the banking system. The cause this time is not bad debts or non-performing loans; rather that the banks’ earnings outlook is dire. Nationalisation may come simply...

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