Banks have started rearranging their strategies and focussing more on traditional banking businesses to prevent further losses, the report says.
Banks have started rearranging their strategies and focussing more on traditional banking businesses, including lending to manufacturing and microfinance, and deposit-generation to prevent further losses, the report says. The traditional deposit-based universal banking model has shown its worth and helped to sustain bank lending during this period of turmoil in investment banking.
The troubles on world financial markets have become more entrenched and the impact of the financial turmoil, combined with high oil and raw materials prices, slower growth in some advanced economies and the strong euro, has been reflected in another series of downward revisions in euro area growth forecasts. Overall, slower economic growth is expected in both 2008 and 2009.
It is possible that the scale of write-downs and resulting indirect effects on the economy will be greater than had been generally anticipated, the EBF states in its latest Economic Outlook noting that much depends on confidence levels.
© EBF
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