29 June 2009

EZA 901 Report: Germany – Banking Sector

German Landesbanks - after the banking consolidation model – where to next?  The presentation of the banking consolidation model on 10Jun can be regarded as a (provisional) end to the government’s efforts to stabilise German banks.

German Landesbanks - after the banking consolidation model – where to next?

•  The presentation of the banking consolidation model on 10 Jun can be regarded as a (provisional) end to the government’s efforts to stabilise German banks.
• For German banks the banking consolidation model can be seen as an alternative option to the special purpose vehicle model with respect to clearing their balance sheets.
• Beyond these two models the following report summarises more general consolidation trajectories in the German banking sector.
• The ascent of the pro-market FDP in local governments and the EU’s advocacy of private dominance in banking are likely to increase momentum in the opening of Landesbanks to private investors.
• The outcome of the federal elections on 27Sep will have a significant influence.
   

Asset conclusions: restructuring of Landesbanks seems indispensable to increasing the profitability and stability in the German banking sector, hence is positive for financial shares in the long term.
 

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