Dragons, in Europe, there are too many banks – BEND.it

“The low interest rates tend to compress interest margins, net due to the rigidity to the low interest rates on deposits. But also the overbanking is a result of the current low level of profitability of banks” in Europe. He says the president of the Ecb Mario Draghi, chairing the annual conference of the Esrb. “The overcapacity in some national banking sectors, and the competition that ensues, exacerbating the pressure on margins. This excess capacity also means that the sector does not operate at maximum efficiency.”

According to the president of the Ecb “in the wider context of generalised excess production capacity and technological innovation, some banks will have to review their business models to sustain profitability”. Draghi asks the policy to be “vigilant”. “The policy must remain vigilant. When we see systemic risks – says – we need to act. The greatest risks of inaction”. In addition, “we Need to carry out additional consolidation efforts, especially in countries with high public debt”. And as you read in the last Bulletin, the Ecb, which underlines that “these countries are particularly vulnerable to an increase in the volatility in the financial markets or rising interest rates”. At the same time, “the full compliance with the stability and growth Pact would be of support to the countries in the correction of budgetary imbalances, guiding them in such a way towards a trajectory of debt as adequate.”

Draghi also speaks to Jobs Act – “The labour market reform introduced in Italy in 2015 has also contributed to the renewed dynamism of employment in the country in the last few quarters”. And’ what we read about the effects of the Jobs Act in the monthly bulletin of the Ecb, which underlines how “in Italy has been registered in the last four quarters, an acceleration” of employment, even if our Country, along with France, has contributed less to Germany to Spain to the employment recovery in the euro area.

“Further consolidation in Countries with high debt” – “we Need to carry out additional consolidation efforts, especially in countries with high public debt”. And’ what we read in the last Bulletin, the Ecb, which underlines that “these countries are particularly vulnerable to an increase in the volatility in the financial markets or rising interest rates”. At the same time, “the full compliance with the stability and growth Pact would be of support to the countries in the correction of budgetary imbalances, guiding them in such a way towards a trajectory of debt as adequate.”

The governing Council of the Ecb “expects the economic recovery to proceed at a moderate pace, but constant.” And’ what we read in the economic bulletin of the central institute, according to which “the domestic demand continues to be supported by the transmission of monetary policy to the real economy. The favourable financial conditions and the improving prospects for demand and profitability of enterprises, continue to promote the recovery of investment”. The forecast on Gdp, already popularized by president Mario Draghi at the meeting held on 8 September, amounted to 1.7% in 2016, to 1.6 in 2017, and 1.6 in 2018. The Eurotower warn, “however, it is expected that the economic recovery in the area is held back by the persistent weakness in foreign demand, partly linked to the uncertainty following the outcome of the referendum in the United Kingdom, as well as by adjustments budget required in different sectors and slow implementation of structural reforms”.

The Ecb has placed at the banks of the euro area, a total of 45.3 billion euros in the second round of the program Tltro2, loans related to the granting of loans to families and businesses. According to some analysts, the projected demand was between 20 and 30 billion euros. In the previous operation, the amount was € 31 billion.