DBRS: Increasing Risks for Small and Medium-Sized German Banks despite Stress Tests Pass
A Bundesbank/BaFin stress test on small and medium-sized German banks and savings banks indicates that these banks are relatively well positioned to withstand a severe economic downturn. Nevertheless, accompanying surveys highlight the banks’ ongoing profitability challenges and risks from recent growth in real estate lending.Key highlights from DBRS’ commentary discussing the conclusions of the stress test:
• Smaller German banks are relatively well positioned to withstand a severe economic downturn.
• Banks appear overly optimistic in their planning regarding the potential for higher interest rates, but an increasing number are intending to pass on negative rates to commercial customers.
• DBRS sees risks from banks’ continued expansion of real estate lending and supports the call for more standardised data collection on real estate.
“On aggregate the stress test shows a 3.5 percentage point decline of banks common equity tier 1 capital ratios in a severe economic downturn. This is well above regulatory capital levels. However, real estate lending and loosening of corporate loan standards is an increasing concern.” said Sonja Förster from DBRS’ EU Financial Institutions team.
DBRS Morningstar is a global credit ratings business with 700 employees in eight offices globally. DBRS and Morningstar Credit Ratings are committed to empowering investor success, serving the market through leading-edge technology and raising the bar for the industry.
Together, we are the world’s fourth largest credit ratings agency and a market leader in Canada, the U.S. and Europe in multiple asset classes. We rate more than 2,600 issuers and 54,000 securities worldwide and are driven to bring more clarity, diversity and responsiveness to the ratings process. Our approach and size provide the agility to respond to customers’ needs, while being large enough to provide the necessary expertise and resources. For more details visit us at dbrs.com.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.