Banking, Financial Markets and Regulation
Like the regulatory framework, the structure of the international financial markets influences the development of financial service providers and economies. Scenarios for the future development of the global financial market, and the related opportunities and risks, are a major part of the work of Deutsche Bank Research.
Interactive map
European banking markets
Talking point
European bank performance: Bottoming out
Current results are still very weak, with total revenues and profits both at the lowest level since 2009. But the largest European banks can justifiably draw hope from a stabilisation in interest income as well as fees and commissions, from declining loan loss provisions and shrinking expenses. The bottom line may have broadly bottomed out, though pressure from litigation charges and the ECB’s balance sheet assessment remains high. New record capital levels abound. [more]
Global financial markets
Tight bank lending, lush bond market: New trends in European corporate bond issuance
In our empirical analysis we investigate the substitution between weak bank lending and lush bond markets and we show that rising bank CDS spreads are consistently associated with positive growth in securities underwriting and negative growth in loan syndication. This suggests that banks and clients switch funding instruments in times of financial stress. In this regard, a well-developed bond market is an important element to increase financial resilience as it offers an alternative source of funding for the real economy and an alternative source of revenue to banks. However, we also note a worrying trend towards financial fragmentation during times of stress which limits diversification potential. [more]
Global financial markets
EU Banking Union: Right idea, poor execution
The idea of Banking Union has a sound economic rationale and would, if it were implemented in a consistent fashion, substantially strengthen financial stability in Europe and in the euro area in particular. However, the design and implementation of the EU Banking Union and its constituent components suffer from two very fundamental contradictions. On the one hand, there is schizophrenic attitude of member states with regard to the necessary degree of supra-nationality to preserve a financially stable internal market for financial services. And on the other, there are the contrasting expectations and motives of member states with regard to Banking Union. Member states and other European law makers still have the chance to put Banking Union on a sound footing. The chance should not be wasted. [more]
In focus
Bank performance in the US and Europe: An ocean apart
Five years after the global financial crisis hit both the US and Europe, banks across the Atlantic are in very different shapes. US banks have returned to record profit levels, while their European peers are struggling to stay above the zero line at all. The differences are mainly driven by diverging trends in revenues, corporate lending growth and loan loss provisions all of which have developed much more favourably in America than in Europe. This may have been caused largely by three underlying factors: i) the better macroeconomic performance of the US, ii) European banks' less aggressive dealing with problematic legacy assets and their greater need to deleverage and shrink, and iii) differences in the institutional setup - in Europe at times triggering doubts over the very survival of the Monetary Union, in the US allowing the Fed to massively intervene in financial markets. As the US economic recovery gains strength and Europe emerges from the debt crisis and recession, banks face improvements on an operating level, with EU financial institutions likely to narrow but not close the gap to their US competitors. [more]
Talking Point
Card fraud: A growing problem?
Card fraud in Europe has risen recently, both in absolute terms and relative to total transaction values for card payments. What is behind this increase and how much is it a cause for concern? [more]
Spotlight on Germany
 
 
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