European financial system 'NOT in a good shape' even 10 YEARS after global CRASH

October 22, 2018
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But he noted that Scandinavian banks who have limited cross-border activity across Europe are performing better than those who have integrated.

Mr Treichl said: “If you look at certain banks, in certain countries, they are doing extremely well.

“Most of them are actually non-cross-border banks.

“You look at Scandinavian banks or banks that are located in Spain but only have foreign business outside of Europe.

“They do a lot better than those banks that play a game on European convergence and that should give a really good story to European politicians.”

Mr Treichl is set to step down as CEO of Erste at the end of 2019, with risk director Berhard Spalt taking the helm.

Earlier this month, a senior European Union official claimed another financial crisis is what is needed to scare European political leaders into completing a banking union.

Olivier Guersent, director general for financial stability, financial services and capital markets union, said there must be “a big enough crisis for them to be scared enough, but not big enough to kill us”.

The concept of a banking union was first established after the 2008 financial crash, and was designed to transfer banking policy responsibility from a national to EU level.

While it is designed for those within the EU, countries who are not part of the eurozone can be considered for application.

The Lehman Brothers investment bank collapsed in September 2008, resulting in the global financial crisis as Wall Street was plunged into meltdown.

Mr Guersent said: “I have the impression that [EU member states] have the false impression that everything’s fine, but everything’s not fine and the job is half done.”

Last week saw Angela Merkel claim that EU leaders had agreed to move forward with the bloc-wide financial proposals.

The German Chancellor said: “Everyone is determined to put a package on the table by the December summit that describes the banking union of the future and also says something about the roadmap — i.e. the way to a deposit guarantee and describes progress on the capital markets union.”

The International Monetary Fund warned last month how the world’s economy is at risk of being crippled by “dangerous undercurrents” in the global financial system.

The IMF detailed how further escalation in the burgeoning trade war could see investors spooked and “significantly harm global growth” with a sudden sell-off in financial markets.

But despite noting how banks are much safer some 10 years later, the IMF noted how new risks have creept into the financial sector.

In their latest Global Financial Stability Report, the IMF said: ”A further escalation of trade tensions, as well as rising geopolitical risks and policy uncertainty in major economies, could lead to a sudden deterioration in risk sentiment, triggering a broad-based correction in global capital markets and a sharp tightening of global financial conditions.”



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