Is there reason to be concerned about the low return on equity of euro-zone banks?

As euro-zone banks ’ activity is linked to interest rates, their return on equity has fallen markedly as a result of the fall in interest rates it is now of around 6% versus 15% prior to the crisis: This development can be welcomed: with zero interest rates, the fact that euro-zone banks generate a risk premium of 600 basis points is perfectly normal and reflects the required risk valuation correctly and not excessively ; But we should not forget that companies in other business sectors continue to have a return on equity of around 10 to 12%. This creates a serious problem for banks: they cannot attract stock market investors or increase their capital, since the return on equity is far higher for non-bank companies, which these investors obviously will prefer over banks. The banks' problem is not so much the absolute level of the return on their equity as its level relative to that obtained in other business sectors.